Original Medicare provides healthcare for millions of Americans at a reasonable price. While it offers many benefits, beneficiaries are expected to pay for some of their healthcare costs as the program doesn’t offer 100% coverage for all services. On average, beneficiaries can expect to pay about 20% of the Part B expenses.
To better plan for your healthcare costs in retirement, you should know what Medicare Part B covers, what you’ll be expected to pay out-of-pocket, and how you can reduce those expenses. In this article, we’ll discuss four options you can employ to minimize medicare expenses.
Medicare Part B Coverage and Cost
First, what does Medicare Part B cover? Part B offers coverage for outpatient and preventive services. This includes doctor’s visits, diagnostic testing, surgeries, flu shots, annual checkups, and durable medical equipment, among other things.
Medicare beneficiaries pay a monthly premium for Part B. Going into 2022, the standard premium is $170.10. You’ll qualify for the standard premium unless you earn a higher income. The Social Security Administration (SSA) looks at your Adjusted Gross Income (AGI) from two years prior to determine your premium. For instance, if you are a married couple filing jointly and your combined income was more than $182,000 but less than $228,000, your individual premium would be increased to $238.10. Rates continue to increase incrementally. The increased amount is called the Income Related Monthly Adjustment Amount (IRMAA). CMS has a helpful table to determine your monthly premium.
In addition to the premium, Part A also has an annual deductible. In 2022, the deductible is $233. After the deductible has been paid, you’ll be responsible for approximately 20% of the Medicare-approved cost of services.
Minimizing Part B Expenses
We’re going to talk about four options you may have to reduce your Part B out-of-pocket costs. No one can employ all of these tactics, but you should consider each one and talk to a licensed agent who can help you determine which option would work best in your situation.
Use Providers Who Accept Medicare Assignment
Our very first tip is one that everyone can use, no matter what other insurance plans you may have or where you live. Providers who have agreed to accept Medicare assignment have agreed to accept Medicare’s fee schedule. They will not charge any more than what Medicare has deemed appropriate for services.
Providers who don’t accept Medicare assignment are allowed to charge up to 15% more for services, leaving you with more out-of-pocket expenses. For example, a provider who accepts Medicare assignment may charge you the Medicare-approved amount of $100 for a service. Part B will pay for 80% of that service, leaving you with a $20 coinsurance expense. A provider who does not accept Medicare assignment can charge you up to $115 for that same service. Part B will still only cover 80% of the approved amount, so you are left paying $35 for the same service.
There are some states that do not allow this practice of charging more than the Medicare-approved amount. These are called MOM states – Medicare Overcharge Measures. Currently, there are eight MOM states: Vermont, Rhode Island, Pennsylvania, Ohio, New York, Minnesota, Massachusetts, and Connecticut.
- Part B offers coverage for outpatient and preventive services.
Enroll in a Medicare Supplement
Medicare supplements are also called Medigap plans. They get their name because they were designed to fill in the “gaps” of Original Medicare (Parts A and B). Medicare supplements cover services that are also covered in Parts A and B. (They do not offer additional coverage like Medicare Advantage plans.) If a service is approved under Original Medicare, it will also be approved by your Medicare supplement.
Medigap plans are offered by private insurance carriers. There are currently ten Medigap plans available: Plans A, B, C, D, F, G, K, L, M, and N. These are standardized plans, meaning that no matter which carrier you purchase one from, it will have the same coverage as it would have had you purchased it through any other insurance carrier. The only thing the carrier is allowed to dictate is the monthly premium.
Each of the ten plans offers different coverage. The three most comprehensive plans are F, G, and N. These three plans will greatly reduce your out-of-pocket expenses from Medicare Part B. For instance, individuals who enroll in Plan F have virtually no out-of-pocket expenses except the premiums. Plan F even covers the Part B deductible.
Enroll in a Medicare Advantage Plan
Another option to reduce your Part B expenses is to enroll in a Medicare Advantage plan. Medicare beneficiaries have to choose between a Medicare supplement and a Medicare Advantage plan – you cannot be enrolled in both.
Medicare Advantage plans work differently than Medicare supplements. They are also sold by private insurance carriers, but they are not standardized plans. That means that each company can offer different coverage options. The only constant is that they have to offer at least the same amount of coverage as Medicare Parts A and B.
Appeal Your IRMAA
If you are paying more than the standard premium for Part B, you may want to appeal the IRMAA determination. The SSA uses your AGI from two years previous. Many retirees do not have the same income that they did two years ago. This is often the case with those who are new to Medicare.
If your income is substantially less than it was two years ago, you can appeal your adjusted premium. You can appeal if you’ve had a life-changing event that has impacted your income. This includes things like the loss of a job, a pension, a spouse, or property income.
Talk to one of our licensed agents about the best option to reduce your Part B expenses. We can explain each option and help you navigate your choices. There are quite a few considerations when choosing Medicare plans, so make sure you have all the information before you decide. Call us today and set up a free consultation.