Imagine if you had a heart attack and needed open heart surgery. Now imagine that you did not have any coverage for that and would need to pay 100% of the cost of that surgery. Pretty upsetting thought, isn’t it?
That could potentially happen if you fail to enroll in Part B, and it’s astonishing how often it happens. We get calls from at least a dozen people every year who either misunderstood (or in some cases were informed wrong by Social Security) about what they really needed to have. Now they have some significant health issue and are learning they have no way to pay for their care.
So if you are wondering “Do I Need Medicare Part B” – this post will really help you. Let’s tackle this question by looking at some common scenarios. (Oh, and grab this cheat sheet I’ve created for you that you can print and keep to remind you what to do later on if you end up delaying Part B for now.)
You Always Need Part B if Medicare Is Primary
Once you retire and have no access to other health coverage, Medicare becomes your primary insurance. While Part A pays for your room and board in the hospital, Part B covers many things that happen both in and out of the hospital. Part B provides 80% coverage for doctor visits, labwork, physical therapy, medical equipment, diabetes supplies, surgeries, chemotherapy, radiation, dialysis and much more.
It is a critical component of your overall health package when Medicare is primary.
Some common scenarios where Medicare is primary are:
- When you are 65 or older and have employer coverage at a company with less than 20 employees
- When you are under 65 on Medicare due disability and work for an employer with less than 100 employees
- If you have retiree coverage from a former employer
- With COBRA insurance, you must enroll in Part B by the 8th month of COBRA
- When you are turning 65 with Tricare for Life (TFL) or CHAMPVA
- When you are 65 or older and enrolled in Medicaid
All of these scenarios require you to be enrolled in Part B. Without it, you would be responsible for the first 80% of all outpatient charges. Even worse, your secondary coverage may not pay at all if you are not actively enrolled in Part B as your primary coverage.
Employer coverage, retiree coverage, COBRA, TFL and Medicaid all function as your secondary insurance only if do your part and first enroll in Part B. Failure to enroll in Part B means you will also owe a penalty if you decide to enroll later on.
You Need Part B to Be Eligible for Supplemental Coverage
Medigap plans do not replace Part B. They pay secondary to Part B.
Part B works together with your Medigap plan to provide you full coverage. This means you must be enrolled in Part B before you are even eligible to apply for a Medicare supplement. Your healthcare providers will bill Medicare, and Part B will then pay 80% of your outpatient expenses after your small deductible. Medicare then sends the remainder of that bill to your Medigap plan to pay the other 20%.
The same goes for Medicare Advantage plans. You are not eligible for a Medicare Advantage plan unless you are enrolled in both Medicare Parts A and B and live in the plan’s service area.
On the flip side, having ONLY Parts A and B with no secondary coverage is also very risky. It leaves you exposed to paying 20%, unending, or some very expensive items. For example, if you needed a knee replacement and had only Medicare, you would pay 20%. A surgery like that might cost in excess of $100,000. Don’t be left holding a bill for 20% of that.
My advice: You should enroll in both Part B and either a Medigap plan or Medicare Advantage plan.
You Can Delay Part B If You Have Other Primary Coverage
Many people ask if they should sign up for Medicare Part B when they have large employer coverage. At a large employer with 20 or more employees, your employer plan is primary. Medicare is secondary.
Medicare can coordinate with large employer coverage to reduce your spending. So when you become eligible for Medicare, you’ll need to decide whether you want to enroll in Part B to reduce your outpatient spending on your employer plan.
If you have a low deductible at your employer plan, then it may not be necessary to have Part B since your employer plan already provides outpatient coverage. This means that you can delay enrollment into Part B until you retire and leave the employer coverage.
It’s up to you but keep in mind that Part B costs at least $134/month for new enrollees in 2017. You will only want to incur that expense if you need Medicare to pay 80% of what your group plan doesn’t cover.
Let’s say your employer coverage has a $5000 deductible. If you have rheumatoid arthritis and are going in to your specialist’s office for an expensive monthly injection, you probably spend a significant amount into your deductible each year. Enrolling in Part B might be worth it as it will pick up 80% of the cost of doctor office administered Part B drugs.
Enrolling into Part B on a Delayed Basis
If you have delayed Part B while you were still working at a large employer, you’ll still need to enroll in Part B eventually. When you retire and lose your employer coverage, you’ll be given a 2-month Special Enrollment Period to enroll in Part B without any late penalty.
You should set up Part B to start the very next day after you lose your employer coverage. For example, if you know you will be retiring on June 30th, you should enroll in Medicare Parts A and/or B to begin on July 1st.
When you activate your Part B, you will activate your 6-month Medicare Supplement open enrollment window. This is your one opportunity to enroll into any Medigap plan without health questions. Once the 6 month window expires, it’s gone forever. If Medigap is too expensive and you prefer a Medicare Advantage plan, you have a short window to also enroll into a Medicare Advantage plan using a Special Election Period. These are tricky, so always work with an agent who specializes in Medicare (like us!) to set that up properly.
Do I need Medicare Part B if I’m a Veteran?
Some people have 2 different coverages that they can choose independent of one another. Federal employees who can opt to use their FEHB instead of Medicare are one group. The most common situation though is with Veterans.
Not all veterans qualify for VA coverage. Your length of military service and your discharge characterization affect your eligibility. If you plan to use VA healthcare coverage as your only coverage, be sure that you apply for VA coverage before your initial enrollment window for Medicare expires. That window runs 3 months before and after your birth month.
Once enrolled in VA coverage, you can choose to skip Medicare and get all of your care at VA clinics and hospitals only. However, I do not advise this. The VA system has been the subject of considerably negative press for years over long waiting times. I have seen many people personally experience this.
Enrolling in Medicare Parts A and B gives you a civilian option. Medicare will pay for Medicare-covered services or items, and Veterans Affairs will pay for VA-authorized services or items.
Be aware that if you opt out of Part B and then later decide to join, you will pay a Part B late penalty. You’ll also need to wait until the next General Enrollment Period to enroll, which means there could be a delay before your coverage becomes active.
You can read more about VA coverage and Medicare here.
Most Common Mistakes Regarding Part B
The most common mistake we see is from people who confuse Part B and Medigap. Just this week, a reader on our Facebook page commented that she was skipping Part B because she was enrolling in a Medigap plan instead.
She didn’t realize that Part B and Medigap are not the same. She cannot purchase Medigap without first enrolling in Part B. I fault our federal government for making this all so confusing.
So just to recap what we covered earlier in this article: Part B is your base outpatient coverage. It pays for 80% of your outpatient services. A Medigap plan is what people with no other coverage buy to pay the other 20%. You need both Parts of Medicare in force before you are eligible to apply for a Medigap plan.
Another mistake we see is people who thought they didn’t need Part B because they are healthy. I’ve seen a number of individuals who said they didn’t get sick often so they opted to only enroll in Part A. Every one of these people assumed that Part A Hospital benefits cover everything in the hospital. So they decided to skip Part B thinking that they didn’t mind paying out of pocket for an occasional doctor visit. They didn’t realize Part B covers many things that occur in a hospital.
Usually they discover their error when they are sent for an MRI or a surgery and find out they now owe thousands or tens of thousands of dollars. Be sure you don’t make the same mistake. If you are unsure, ask your insurance agent: “Do I Need Medicare Part B?” If he or she tells you no, be sure you get a full explanation on why you are able to delay your. Get a second opinion if you are unsure, and never rely on Social Security to give you the right answer. We’ve seen too many people get wrong answers from inexperience government employees.
To recap the important points in this article, most people need Part B at some point. When you enroll will depend on what other coverage you currently have when you turn 65. Also, Part B is not a supplement. You need Part B before you can enroll in Medigap or a Medicare Advantage plan.
Lastly Part B is not free unless you qualify for a Medicare Savings program due to low income. Though you must pay a premium for Part B, it provides a very significant 80% of all your outpatient expenses. Be sure to enroll before it’s too late.
Not sure if you need to enroll? Well that’s what we are here for. Reach out to one of our team of Medicare experts here at National Senior Savings. Our service is free, and we’d be glad to help.