Medicare Part B – Medical Insurance

According to the Social Security Administration (2014b), anyone who is eligible for premium-free part A can enroll in Part B with a monthly premium. If you are not eligible for premium-free Part A, you can receive Part B if you are a U.S. citizen or “a lawfully admitted non-citizen who has lived in the United States for at least five years” (p. 7). Medicare Part B is completely voluntary and not funded by payroll taxes; therefore, enrollees must pay a monthly premium. These premiums are typically deducted from the enrollee’s Social Security check, unless there is a special circumstance (i.e. the beneficiary does not receive Social Security payments or the Social Security payment is lower than the cost of the Part B premium). The premium is determined by the Office of the Actuary each year to cover 25% of Part B costs, while 75% of the costs are paid for through general revenues (Learn about, 2012; SSA, 2013; Van de Water, 2013). These premiums are deposited into the Supplemental Medical Insurance (SMI) Trust Fund, which also receives a small amount of financial from special payments by states and from prescription drug manufacturer fees (Lew et al., 2014).

Original Medicare Part B “helps cover medically necessary doctors’ services, outpatient care, home health services, durable medical equipment, and other medical services” (DHHS, 2014, p. 40). Most preventive services are also covered, including a “wellness screening” once per year. If you have Original Medicare, you are required to pay the Part B deductible, which is $147 per year in 2014 and 2015 (Costs at a glance, 2014). After that, you typically pay 20% of the cost of the service. Wellness visits do not require a deductible or copay. During the first year of having Part B, you can have a “Welcome to Medicare” preventive visit that includes a review of your medical history, as well as education and counseling about preventive services. After that you can receive an annual wellness visit that includes a “Health Risk Assessment”. This visit is only covered once every 12 months (DHHS, 2014).

There are a variety of services covered by Part B; however, there is also a lot that is not covered. These health services include most dental care; eye exams related to prescribing glasses; dentures; cosmetic surgery; acupuncture; hearing aids and exams to fit hearing aids; and long-term care (DHHS, 2014). Many people who want these additional services or who want to pay lower deductibles and copays will purchase Medicare Advantage or Medigap.

Part B premiums for Original Medicare are the same for most people; however, if you have a higher income, your premium is higher. The income amount used to determine your premium is based on two years earlier. In other words, your 2017 income is used to determine your 2019 premium and your 2018 income is used to determine your 2020 premium. Part B premiums for 2019 and 2020 based on income are shown below (Costs at a glance, 2019). Note that the income thresholds shown below are frozen until 2019 as part of the Affordable Care Act (ACA) and not increased each year due to inflation. The reasoning behind this income freeze is so that over time, there will be an increase in the number of beneficiaries paying a higher premium amount to increase Part B revenues (KFF, 2012). The Social Security Administration expects this to affect roughly 7% of beneficiaries in 2020

Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

If your yearly income in 2017 (for what you pay in 2019) was You pay each month (in 2019)
File individual tax return File joint tax return File married & separate tax return
$85,000 or less $170,000 or less $85,000 or less $135.50
above $85,000 up to $107,000 above $170,000 up to $214,000 Not applicable $189.60
above $107,000 up to $133,500 above $214,000 up to $267,000 Not applicable $270.90
above $133,500 up to $160,000 above $267,000 up to $320,000 Not applicable $352.20
above $160,000 and less than $500,000 above $320,000 and less than $750,000 above $85,000 and less than $415,000 $433.40
$500,000 or above $750,000 and above $415,000 and above $460.50

IRMAA is an extra charge added to your premium.

If your yearly income in 2018 (for what you pay in 2020) was You pay each month (in 2020)
File individual tax return File joint tax return File married & separate tax return
$87,000 or less $174,000 or less $87,000 or less $144.60
above $87,000 up to $109,000 above $174,000 up to $218,000 Not applicable $202.40
above $109,000 up to $136,000 above $218,000 up to $272,000 Not applicable $289.20
above $136,000 up to $163,000 above $272,000 up to $326,000 Not applicable $376.00
above $163,000 and less than $500,000 above $326,000 and less than $750,000 above $87,000 and less than $413,000 $462.70
$500,000 or above $750,000 and above $413,000 and above $491.60

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