Medicare Part B Premium

The Medicare Part B premium is a monthly fee that Medicare beneficiaries pay for coverage of doctor's services, lab tests, and outpatient care under the federal health insurance program.

Medicare Part B coverage complements hospital insurance under Medicare Part A, which does not charge premiums for most U.S. citizens and permanent residents age 65 and older, based on past payroll taxes paid.

Medicare sets Part B premiums annually, and they are deducted monthly from the Social Security checks of most participants.

About 7% of Medicare Part B participants pay more than the standard monthly premium for coverage based on income.

Key Takeaways

  • Medicare Part B covers ambulance services, doctor visits, lab tests, and certain medical equipment.
  • In contrast to Part A, which is available to most seniors at no cost, those who sign up for Part B pay a monthly premium.
  • The premium is higher for about 7% of participants with the highest income.
  • Part B premiums are set annually and deducted monthly from Social Security checks for most participants.

The standard Medicare Part B monthly premium is $170.10 in 2022 and $164.90 in 2023. Some participants pay more based on income.

What Is the Medicare Part B Premium?

Medicare is a U.S. federal health insurance program funded primarily by payroll taxes under the Federal Insurance Contributions Tax (FICA). Medicare's share is 2.9% of annual wages up to $147,000 in 2022, split evenly between employees and employers.

Medicare Part B is insurance for outpatient medical care, covering doctor visits, preventive screenings, ambulance services, mental health care, and durable medical equipment.

The standard monthly premium for Part B is $164.90 for 2023, down from $170.10 in 2022. The premium is higher for about 7% of Part B recipients with the highest incomes, as shown in the table below.

Premium surcharges for the highest earners are set for the year ahead based on modified adjusted gross income for the most recent tax year. For example, the premium surcharges for 2023 apply to single taxpayers with modified adjusted gross income (MAGI) above $97,000 and joint filers with MAGI above $194,000 in 2021.

Medicare Part B Costs for 2023
Individuals Married Filing Jointly  Married Filing Separately  Monthly Fee for 2023
$97,000 or less $194,000 or less $97,000 or less $164.90
Above $97,000 up to $123,000 Above $194,000 up to $246,000 N/A $230.80
Above $123,000 up to $153,000 Above $246,000 up to $306,000 N/A $329.70
Above $153,000 up to $183,000 Above $306,000 up to $366,000 N/A $428.60
Above $183,000 and less than $500,000 Above $366,000 and less than $750,000 Above $97,000 and less than $403,000 $527.50
$500,000 and above $750,000 and above $403,000 and above $560.50
Source: 2023 premiums based on 2021 modified adjusted gross income.

The standard Part B premium covers about 25% of the cost, with Medicare subsidizing the remainder. The premium surcharge tiers are set at 35%, 50%, 65%, 80% and 85% of cost.

The annual deductible for Part B is $226 for 2023, compared with $233 in 2022. In addition, the patient pays 20% of the bill as coinsurance.

Participants who don't have their Part B premiums deducted automatically from Social Security or Railroad Retirement Board benefits can expect a bill for them every three months.

Eligibility for Medicare Part B

In general, Medicare is available to U.S. citizens and permanent legal residents who:

  • Are age 65 or older
  • Are under age 65 and have a disability
  • Have end-stage renal disease (ESRD)
  • Have amyotrophic lateral sclerosis, also called Lou Gehrig's disease.

When you are first eligible for Medicare, you have a seven-month Initial Enrollment Period to sign up for Part A and/or Part B. If you're eligible when you turn 65, you can sign up during the seven-month period that:

  • Starts three months before the month you turn 65
  • Includes the month you turn 65
  • Ends three months after the month you turn 65

If you don't sign up for Part B when you are first eligible, you could be stuck paying a permanent late enrollment penalty of 10% for each year of coverage missed if you sign up later.

However, you may choose to delay enrolling in Part B without a penalty if you already have qualifying health coverage. Check Medicare's website to find out more.

The Other Parts of Medicare

Medicare Part A

Medicare Part A, covers inpatient care at hospitals, skilled nursing homes, and hospices. Part A coverage is typically free if you or your spouse paid U.S. payroll taxes for at least 10 years.

There is a deductible per benefit period for Part A, set at $1,556 in 2022 and $1,600 in 2023. There is no coinsurance payment unless a hospital stay exceeds 60 days.

In contrast with the annual deductible for Part B, the Part A deductible applies to each benefit period. The benefit period starts when you start receiving covered care and ends one you stop receiving it for 60 days. That means you could incur multiple Part A deductibles in a single year.

Medicare Part C

Medicare Part C—also called Medicare Advantage—is offered by private companies contracted by Medicare.

If you choose to participate in a Medicare Advantage Plan, it will replace Part A and Part B coverage, and may provide extra coverage for vision, hearing, and dental care. Unlike some private health insurance plans, most Medicare Advantage plans include Medicare Part D (prescription drug) coverage.

Medicare Advantage plans may pay some or all of a participant's Plan B premium, and often have lower out-of-pocket costs. However, they often impose additional fees or restrictions on care outside their provider network, and require referrals to see specialists. The average monthly premium for a Medicare Advantage plan was projected to drop to $18 in 2023, from $19.52 in 2022. The Medicare Advantage premium is in addition to the Plan B premium, which must be paid to maintain coverage.

Medicare Part D

Medicare Part D prescription drug coverage is an optional benefit offered to anyone who has Medicare. The average basic monthly premium for standard Medicare Part D coverage was projected at $31.50 for 2023, down from $32.08 in 2022.

If you choose not to get Medicare Part D coverage when you're first eligible, you may incur a late enrollment penalty if you join later, unless you have had other creditable prescription drug coverage, such as that which your employer or spouse's employer may provide.

On March 27, 2020, President Trump signed into law a $2 trillion coronavirus emergency stimulus package called the CARES (Coronavirus Aid, Relief, and Economic Security) Act. It expands Medicare's ability to cover treatment and services for those affected by COVID-19. The CARES Act also:

  • Increases flexibility for Medicare to cover telehealth services.
  • Authorizes Medicare certification for home health services by physician assistants, nurse practitioners, and certified nurse specialists.
  • Increases Medicare payments for COVID-19–related hospital stays and durable medical equipment.

For Medicaid, the CARES Act clarifies that non-expansion states can use the Medicaid program to cover COVID-19–related services for uninsured adults who would have qualified for Medicaid if the state had chosen to expand. Other populations with limited Medicaid coverage are also eligible for coverage under this state option.

How Much Does Medicare Part B Cost?

The standard monthly Medicare Part B premium is $164.90 for 2023, down from $170.10 in 2022. Individuals with more than $97,000 in 2021 modified adjusted gross income (or twice that for married couples) were set to pay more in 2023. About 7% of Medicare Part B participants were due to pay higher monthly premiums ranging from $230.80 to $560.50 based on income. The annual deductible for Medicare Part B coverage is $226 for 2023, from $233 in 2022.

Do I Need Medicare Part B?

For many people, Medicare Part B is worth the extra cost. It offers coverage for ambulance services, doctor visits, lab tests, and medical equipment.

If not covered by insurance, these costs could add up to a giant bill if you have a health problem or an injury. People working past age 65 for an employer providing coverage should compare the costs and benefits of that coverage with those of Medicare.

What Are the Four Parts of Medicare?

The four parts of Medicare include the following:

  • Part A is insurance for the costs of hospitalization and hospital treatment. Most eligible seniors get this for free.
  • Part B is optional and covers medically necessary outpatient services and care. The monthly Part B premium is $164.90 for most individuals for 2023. Surcharges apply for approximately 7% of plan participants based on income.
  • Part C is also called Medicare Advantage. Such plans replace coverage under parts A and B of traditional Medicare, typically offering Part D prescription drug coverage and some additional benefits, along with lower out-of-pocket costs. Medicare Advantage plans may restrict coverage to providers in the network and require authorization for specialist consultations and other services.
  • Part D is optional coverage for prescription drug coverage medicine and is available from private insurance companies. Many Medicare Advantage Plans provide Part D coverage. The Medicare site has a search function to help people find a Part C or a Part D plan.

The Bottom Line

Medicare Part B covers ambulance services, doctor visits, lab tests, and certain medical equipment. In contrast with Part A, which is available to most seniors at no cost, those who sign up for Part B pay a monthly premium. Part B also has an annual deductible and coinsurance of 20%.

The government subsidizes about 75% of the cost of Medicare Part B for the vast majority of beneficiaries paying the standard monthly premium, a good deal for those who qualify.

Article Sources
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