image description

Medicare Part B

Medicare is a federal program that provides health insurance coverage for people who are age 65 or older. Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD). Medicare is comprised of four parts — Parts A, B, C, and D.

Definition: Medicare Part B primarily pays for care provided by doctors and other health care professionals (like nurse practitioners), outpatient services, durable medical equipment (DME), home health, and some preventive services.

History: Medicare Part B began in 1965 under the same legislation that enacted Medicare Part A and the Medicaid program.

Enrollment: In 2019, 46.4 million Americans were enrolled in Medicare Part B.

Financing: Medicare Part B is financed through general revenues and premiums collected from beneficiaries. Because of the way it is financed, technically Medicare Part B can never be insolvent. However, because the federal government pays 75 percent of the cost of Part B, many policymakers have begun to grow concerned about the increased cost of the program and have proposed ways to reduce these federal expenditures.

Premiums: Medicare beneficiaries pay monthly premiums, which are adjusted each year and account for roughly 25 percent of Part B costs. Currently most beneficiaries pay a monthly premium of $144.60 per month. Individuals with higher incomes pay a higher monthly premium. (More information on Medicare Part B premiums is available here.) Individuals who lack other coverage (generally through a current or former employer) who delay signing up for Part B may be assessed a permanent late enrollment penalty. (More information on the late enrollment penalty is available here.)

Out-of-Pocket Costs: In addition to the monthly premium, beneficiaries have an annual deductible of $198 for 2020. Beneficiaries also are assessed a copayment of 20 percent of the Medicare-approved cost of the service. (More information is available here.)