Medicare Made Simple

I know what you're asking. Can something as complex and confusing as Medicare be made simple? I think the answer is yes! If you have a basic understanding of your options, combined with working with a licensed and experience insurance broker. You have all the tools you need to keep Medicare simple for you. My hope is that this blog can provide useful and relative information to you to help you gain a little more understanding of Medicare and how it works. If you find the content I provide beneficial or not, please let me know in the comments below. Thanks for being here!

-Phil

Over the next few weeks we're going to break Medicare down into more manageable pieces. For the second post in this series, let's focus on the Part B of Medicare. What does it cover? What are the positives? What are the negatives? Is there a penalty?

Part B

When we took a look at Part A, we learned it had to do with a lot of inpatient hospital coverage and the costs associated with it. Part B essentially covers just about everything else that Original Medicare covers. We will go more in-depth in a moment but for simplicity's sake, when you think of Part B, think outpatient services +. If you are not admitted to the hospital, then Part B is going to cover it.

Now, just like Part A, Part B has three gaps we are going to talk about today and I would argue (And most would agree) that Part B has the scariest gap of them all.

But before we get into the gaps let's take a look at all the different services Part B helps cover. Part B covers 2 types of services: Medically Necessary Services and Preventative services. Thankfully, most preventative services are 100% covered like a yearly wellness exam and certain vaccines, including the shingles shot for 2023. As long as the provider accepts Medicare's assignment, the amount Medicare is willing to pay.

Medically necessary services is a different subject because it covers a lot of services. Part B covers ambulance services, durable medical equipment, mental health care, some outpatient prescription drugs, diagnostic tests, outpatient surgeries, physical therapy and rehabilitation, blood, and all doctors services. Remember, even if you are hospitalized, any doctors are paid through Part B. I pretty extensive list can be found here. You can also search for an average price for an outpatient procedure here. 

Part B covers a laundry list of procedure that I don't want to overwhelm you with but know it is a lot. Now that we understand how important Part B is to having comprehensive medical coverage lets take a look at the gaps.

The first gap is that Part B does come with a yearly deductible. For 2023, it is $226. This means that you will have to pay the first $226 before Original Medicare will start paying its share of the costs.

This feeds right into the next gap, which is how much Medicare pays for Part B services. After meeting your deductible, your coverage switches to an 80/20 coinsurance, meaning Original Medicare will pay 80% of any bill for approved services and you will be responsible for the remaining 20%. This is actually a very good cost share for the price of the coverage. The problem with this is that there is NO MAX to how much you will have to contribute. In other words, you will indefinitely have to pay 20% of any Part B service that you have, which we already established, is a lot of services.

For example, you are having a total knee replacement, according to Medicare.gov's procedure price finder, the average amount a patient pays is $1,818 - $2,054. This is in addition to any wheelchair costs, ambulance ride, physical therapy, etc... The costs can add up very quickly.

This is the gap in Original Medicare that can severally hurt seniors financially or even bankrupt them.

The last gap is that Original Medicare allows providers and hospitals to charge an excess charge of up to 15%. An excess charge is when a provider or hospitals charges 15% more than the amount Medicare says they will pay, thus leaving you, the Medicare beneficiary, with the extra cost. This practice is not allowed in all states, but is legal in most.

The final Part B topic I want to cover is the about the late enrollment penalty. The Part B penalty happens when someone doesn't enroll into it when they were supposed to sign up. The penalty is 10% for each your someone could have signed up for Part B, but did not. Now remember, this penalty does not apply if you or your spouse were still working and you had medical coverage through the employer. So don't think that you have to apply for Part B as soon as you turn 65. Once you or your spouse retire, you have qualify for a Special Enrollment Period that allows you to enroll into Part B penalty free.

Part A has the same exact penalty but it is not as common of an issue as it is for Part B. Why is that? The reason is, for most people, Part A is premium free. The majority of people enroll at their first opportunity because it doesn't cost anything. Part B carries a $164.90 premium, so many seniors delay enrollment as long as they can, and if they are misinformed or confused about when and how to enroll, they can find themselves with a penalty.

How can someone avoid a Part B penalty and cover these scary gaps? Well, number 1, you can work with an independent broker who can help you understand when it's time for you to enroll and also help you explore your options for additional coverage. Everyone with Original Medicare only or enrolling new to Medicare have to take the time to look at either a Medicare Supplement or a Medicare Advantage plan. I would even argue it is imperative that you do so. Even if you are healthy when you turn 65, that can change in an instance and it is important to prepare for when that happens. Nobody likes having to pay for insurance, including myself, but it is vital when you need it most.

Let's do a quick review for Part B. It can become very complicated because it covers so much.

Covers "Medically Necessary Services" like outpatient surgeries, durable medical equipment, diagnostic tests, ambulance rides, etc. It also covers preventative services like a yearly wellness check and certain vaccines.

Part B also has a monthly premium, which for 2023 is $164.90.

You can also have a late penalty if you enroll late into Part B but it is easily avoidable if you or a spouse are still working.

Sources:

https://www.medicare.gov/

https://www.ssa.gov/benefits/retirement/planner/credits.html