What Medicare Part B covers and costs

Medicare Part B is the part of Medicare that covers doctor visits, outpatient care, medical equipment, and preventive services. It is not automatic — you have to sign up for it, and it costs money each month. Most people pay a monthly premium (the amount varies based on your income), plus you pay a share of costs when you use services.

Part B covers things like visits to your doctor's office, lab tests, X-rays, ambulance services, and durable medical equipment such as wheelchairs or oxygen. It does not cover hospital stays (that is Part A) or prescription drugs (that is Part D). If you have a Medigap or Medicare Advantage plan, your out-of-pocket costs may be lower, but Part B is the foundation underneath.

The monthly premium for Part B changes each year. In 2024, the standard premium was $164.90 per month for most people, but higher-income beneficiaries pay more. The exact amount depends on your modified adjusted gross income from two years prior. You also pay a yearly deductible before Part B starts to pay, and then you typically pay 20 percent of the cost of covered services after that.

Key Takeaways

  • Medicare Part B is optional but recommended for most people, and you must sign up during your initial enrollment window or face a permanent penalty.
  • Part B covers doctor visits, lab work, imaging, and medical equipment, but not hospital stays or prescription drugs.
  • You pay a monthly premium, an annual deductible, and usually 20 percent of the cost of services after the deductible is met.
  • If you delay signing up without a valid reason, Medicare adds a 10 percent penalty to your premium for each year you were late, and that penalty stays with you permanently.
  • Your premium amount depends on your income from two years ago, so major life changes (retirement, marriage, divorce) can affect what you pay.

When you must sign up for Part B

You become may be able to access for Medicare at age 65. Your Initial Enrollment Period is the seven-month window that starts three months before the month you turn 65 and ends three months after. If you sign up during this window, your coverage begins the month you turn 65 (or the first day of the month after you sign up, whichever is later).

If you miss this window, you can still sign up during the General Enrollment Period, which runs January 1 through March 31 each year. However, coverage does not start until July 1 of that year, and you will owe a permanent penalty on your premium. The penalty is 10 percent of the standard Part B premium for each full year you were may be able to access but did not sign up. That penalty stays on your bill for life.

There is one exception: if you were covered by a group health plan through your own job (or your spouse's job) when you turned 65, you may have a special enrollment period. You can sign up without penalty for up to eight months after your employment or coverage ends. You will need to show proof that you had group coverage, so keep your insurance card or a letter from your employer's benefits office.

How to sign up for Part B

You can sign up through Medicare.gov, by phone at 1-800-MEDICARE (1-800-633-4227), or in person at your local Social Security office. If you are already receiving Social Security benefits, you may be automatically enrolled in Part B when you turn 65 — but you should verify this and make sure the enrollment is correct for your situation.

When you sign up, have your Social Security number and information about any current health coverage ready. If you are self-employed or have your own business, you will also need to report your expected income for the year, because that affects your premium amount. If your income drops significantly (for example, you retire), you can request a reduction in your premium by submitting a form and proof of the income change.

Income-related premiums and how they work

If your income is above a certain threshold, you pay a higher Part B premium. Medicare looks at your modified adjusted gross income from your tax return from two years before the current year. For 2024, if your income was above $103,000 (single) or $206,000 (married filing jointly) in 2022, you paid more than the standard premium.

The higher amounts are called Income-Related Monthly Adjustment Amounts, or IRMAA. There are five income brackets, and the higher your income, the more you pay. For example, in 2024, a single person with income between $103,000 and $129,000 paid about $230 per month instead of $165. Someone with income over $500,000 paid over $560 per month.

If your income drops because you retire, get divorced, or lose a spouse, you can request that Medicare recalculate your premium. You will need to file a form (SSA-44) and provide proof of the change, such as a recent tax return, a divorce decree, or a death certificate. This is called a life-changing event, and it is one of the few times Medicare will adjust your premium outside the normal annual cycle.

What you pay when you use Part B services

After you pay your monthly premium, you are responsible for other costs. First, you pay an annual deductible — in 2024, that was $240. Once you have paid that amount out of pocket for covered services, Part B starts to pay its share. Then you typically pay 20 percent of the cost of covered services, and Medicare pays 80 percent.

However, some services have different cost-sharing rules. For example, preventive services (like annual wellness visits, cancer screenings, and vaccinations) are covered at no cost to you after you meet your deductible. Mental health services, physical therapy, and occupational therapy may have different rules depending on where you receive them.

If you receive care from a doctor who does not accept Medicare (called an out-of-network provider), you may pay more. Some doctors accept Medicare assignment, which means they agree to accept Medicare's approved amount as full payment. Others do not, and you could owe the difference between what they charge and what Medicare approves. Always ask your doctor whether they accept Medicare assignment before your visit.

Part B and other Medicare coverage options

Part B is the foundation of Medicare, but you have choices about how to use it. You can stay in Original Medicare (Part A plus Part B) and buy a separate Medigap policy to cover some of your out-of-pocket costs. Medigap policies are sold by private insurance companies and help pay deductibles, coinsurance, and copayments that Medicare does not cover.

Alternatively, you can join a Medicare Advantage plan (Part C), which is an all-in-one alternative to Original Medicare. Medicare Advantage plans are run by private insurance companies and include Part A, Part B, and usually Part D (prescription drugs) all in one plan. You still pay your Part B premium to Medicare, but you get your coverage through the Advantage plan instead. These plans often have lower out-of-pocket costs, but they usually require you to use doctors and hospitals in their network.

You must have Part B to join a Medicare Advantage plan, so you cannot avoid Part B by choosing Advantage. However, you can switch between Original Medicare and Medicare Advantage during the annual open enrollment period (October 15 through December 7 each year).

What happens if you do not sign up on time

If you miss your Initial Enrollment Period and do not have a valid reason, you will owe a permanent penalty. The penalty is 10 percent of the standard Part B premium for each full year you were may be able to access but did not enroll. This penalty is added to your monthly premium for the rest of your life, even if your income drops or you switch plans later.

For example, if you turned 65 in 2020 but did not sign up for Part B until 2024, you would owe a penalty for four years. That is 40 percent added to your standard premium, permanently. The only way to avoid this penalty is to sign up during your Initial Enrollment Period or to have a valid reason for the delay, such as group health coverage through your job.

If you believe you have a valid reason for missing the deadline, you can request a waiver of the penalty by contacting Social Security. You will need to provide documentation of why you did not sign up, such as proof of group coverage or evidence that you were not aware you needed to enroll. Social Security will review your request, but approval is not may provide.

Frequently Asked Questions

Do I have to sign up for Part B when I turn 65?

Part B is optional, but if you do not sign up during your Initial Enrollment Period and you do not have group health coverage through your job, you will owe a permanent 10 percent penalty on your premium for each year you delay. Most people should sign up to avoid this penalty, but if you have employer coverage, you may be able to delay without penalty.

Can I drop Part B if I do not think I need it?

Yes, you can drop Part B at any time, but if you drop it and later want to re-enroll, you will owe the late-enrollment penalty unless you have a valid reason for the gap. If you are still working and have group coverage, you can drop Part B without penalty and re-enroll later without a penalty.

Why does my Part B premium depend on my income from two years ago?

Medicare uses your tax return from two years prior to calculate income-related premiums. This is called a look-back period. If your income has dropped since then (for example, you retired), you can request that Medicare recalculate your premium based on your current income by filing a life-changing event form.

What is the difference between Part B and Part D?

Part B covers doctor visits, lab work, and medical equipment. Part D covers prescription drugs. You sign up for Part D separately, and it is also optional, but you will owe a penalty if you delay without a valid reason. You can have both Part B and Part D at the same time.

If I have Medicare Advantage, do I still pay the Part B premium?

Yes. You pay your Part B premium to Medicare, and then you also pay any premium your Medicare Advantage plan charges (many charge zero). The Advantage plan then provides your Part A and Part B coverage through its network, but you still owe the Part B premium separately.