7.2 Medicare Part B: Medical Insurance
Key Takeaways
- Medicare Part B covers physician services, outpatient care, preventive services, durable medical equipment, mental health care, and some medically necessary drugs.
- The 2026 standard Part B monthly premium is $202.90, the annual deductible is $283, and coinsurance is 20% after the deductible.
- High-income beneficiaries pay an Income-Related Monthly Adjustment Amount (IRMAA); roughly 8% of beneficiaries pay a surcharge based on modified adjusted gross income from two years prior.
- The late enrollment penalty for Part B is 10% of the premium for each full 12-month period you were eligible but did not enroll, and it lasts as long as you have Part B.
- Providers who accept assignment agree to accept the Medicare-approved amount as full payment, limiting beneficiary cost to the 20% coinsurance and deductible; non-participating providers are capped by a 115% limiting charge.
What Medicare Part B Covers
Quick Answer: Medicare Part B is medical insurance. It covers doctor visits, outpatient services, preventive care, durable medical equipment, mental health, and some medically necessary drugs. The 2026 standard monthly premium is $202.90, the annual deductible is $283, and you generally pay 20% coinsurance after the deductible. High-income beneficiaries pay more through IRMAA.
While Part A covers inpatient hospitalization, Part B covers the medical services you receive outside the hospital (and many services received while hospitalized that are not bundled into the Part A payment). Part B is optional but heavily taken: nearly everyone eligible for Part A also enrolls in Part B to avoid gaps and late penalties.
Covered Service Categories
1. Physician Services Doctor office visits, consultations, and physician services provided in a hospital (the professional component of reading an X-ray, for example) are covered. Whether you pay 20% depends on assignment, discussed below.
2. Outpatient Hospital Services Emergency department visits, outpatient surgery, ambulatory surgical centers, and outpatient diagnostic tests (lab, X-ray, MRI, CT) are covered under Part B.
3. Preventive Services Part B covers a wide range of preventive services with no coinsurance and no deductible when delivered by a participating provider. These include the "Welcome to Medicare" preventive visit (within the first 12 months of Part B), annual wellness visits, cardiovascular screenings, diabetes screenings, cancer screenings (mammograms, colonoscopies, cervical), flu and pneumococcal vaccines, and bone mass measurements.
4. Durable Medical Equipment (DME) Items such as walkers, wheelchairs, hospital beds, oxygen equipment, and diabetic testing supplies are covered at 20% coinsurance after the deductible.
5. Mental Health Services Outpatient mental health care (psychiatrist, psychologist, clinical social worker) is covered, and coinsurance has been reduced over time; today it is generally 20%, the same as other Part B services.
6. Some Drugs Part B covers drugs that are not usually self-administered - typically those administered by a physician (infusion drugs, certain injectables, immunosuppressive drugs for transplant recipients). Most outpatient prescription drugs are covered under Part D, not Part B.
2026 Premium, Deductible, and Coinsurance
| Cost-Sharing Element | 2026 Amount |
|---|---|
| Standard monthly premium | $202.90 |
| Annual deductible | $283 |
| Coinsurance after deductible | 20% of Medicare-approved amount |
| Immunosuppressive drug-only premium | $121.60/month |
The standard premium is deducted from the beneficiary's Social Security check for most enrollees. The immunosuppressive drug-only premium of $121.60/month applies to a limited group of beneficiaries whose End-Stage Renal Disease (ESRD) coverage ended (36 months after a kidney transplant) but who qualify to keep Part B solely to cover immunosuppressive drugs.
How Coinsurance Works in Practice
- You pay the $283 annual deductible first.
- After the deductible is met, Medicare pays 80% of the approved amount for most covered services.
- You pay the remaining 20% (the coinsurance).
- There is no annual out-of-pocket maximum in Original Medicare. (Medicare Advantage plans, by contrast, must impose an annual cap.)
This 20% coinsurance with no cap is the principal reason beneficiaries buy Medigap supplement policies or enroll in Medicare Advantage plans.
IRMAA: The Income-Related Monthly Adjustment Amount
Higher-income beneficiaries pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard Part B premium. Approximately 8% of Medicare beneficiaries pay an IRMAA surcharge.
How IRMAA Is Determined
- It is based on modified adjusted gross income (MAGI) from two tax years prior (the 2026 IRMAA is based on 2024 tax returns).
- Thresholds are set by law and adjusted annually. Beneficiaries are notified by Social Security if they owe IRMAA.
- If income drops due to a life-changing event (retirement, divorce, death of spouse, work reduction), you can appeal the IRMAA determination.
Why IRMAA Matters for Producers
When advising a client near a premium tier, explain that income two years ago drives today's Medicare premium. A client whose income has fallen may benefit from filing an appeal. Life-changing-event appeals are a small but testable point on the A&H exam.
Late Enrollment Penalty
Part B has a late enrollment penalty (LEP) designed to discourage people from waiting until they are sick to enroll:
- Penalty amount: 10% of the premium for each full 12-month period you were eligible for Part B but did not enroll.
- Duration: The penalty is permanent - you pay it for as long as you have Part B.
- Trigger: The penalty applies when you did not have credible coverage from an employer group plan (with 20+ employees) or other qualifying source during a Special Enrollment Period.
Example
If you delayed Part B for 30 months (2.5 years) without credible employer coverage, you would pay 20% more (two full 12-month periods) than the standard premium every month for as long as you have Part B.
In 2026, that would be an extra $40.58/month ($202.90 x 20%), bringing the effective premium to $243.48 - and the penalty applies on top of any IRMAA surcharge as well.
Original Medicare: Part A + Part B Together
Original Medicare is the combination of Part A (hospital insurance) and Part B (medical insurance). Beneficiaries who enroll in both have coverage for:
- Inpatient hospital, SNF, home health, hospice (Part A).
- Physician, outpatient, preventive, DME, mental health, some drugs (Part B).
Original Medicare does not cover outpatient prescription drugs (you need Part D) and does not have an annual out-of-pocket maximum. Beneficiaries can fill gaps with:
- Medigap (Medicare Supplement Insurance) - pays Part A and Part B cost-sharing.
- Medicare Advantage (Part C) - replaces Original Medicare with a private plan that bundles A, B, and usually D, and imposes an annual out-of-pocket cap.
A producer must understand these combinations because the choice between Original Medicare + Medigap + Part D versus Medicare Advantage is one of the most common decisions a Medicare-eligible client faces.
Assignment: Participating vs Non-Participating Providers
A key cost concept in Part B is assignment - whether a provider accepts the Medicare-approved amount as full payment.
Accepting Assignment
A provider who accepts assignment agrees to:
- Accept the Medicare-approved amount as the full payment.
- Bill Medicare directly.
- Limit the beneficiary's cost to the deductible and 20% coinsurance.
Non-Participating Providers
Providers who do not take assignment may charge more than the Medicare-approved amount. The limiting charge caps what a non-participating provider can bill a Medicare beneficiary at 115% of the Medicare-approved amount. The beneficiary is responsible for the difference (up to the limiting charge) plus their normal coinsurance.
Why This Matters
- Most physicians participate (accept assignment).
- Beneficiaries who see non-participating providers pay more out of pocket.
- Medigap plans generally pay the Part B 20% coinsurance but may not cover excess charges from non-participating providers (Medigap Plan F and Plan G have different rules).
What Part B Does NOT Cover
- Routine dental, vision, and hearing (eyeglasses, hearing aids, routine dental exams).
- Long-term custodial care (help with ADLs).
- Most outpatient prescription drugs - covered under Part D.
- Cosmetic surgery unless medically necessary.
- Care outside the United States in most cases (some Medigap plans cover foreign travel emergencies).
Key Exam Takeaways for Part B
For the A&H exam, the Part B figures and concepts most likely to be tested are:
- 2026 standard premium: $202.90/month.
- 2026 annual deductible: $283.
- 20% coinsurance after the deductible, with no annual out-of-pocket maximum in Original Medicare.
- IRMAA applies to high-income beneficiaries (roughly 8%), based on MAGI from two years prior.
- Late enrollment penalty: 10% per full 12-month period, permanent.
- Assignment concept and the 115% limiting charge on non-participating providers.
- Part A + Part B = Original Medicare; alternatives include Medigap and Medicare Advantage.
Mastering these allows you to confidently counsel clients on their Medicare options and answer the exam's Medicare questions correctly.
What is the 2026 standard monthly premium for Medicare Part B?
After meeting the Part B deductible in 2026, what coinsurance does a beneficiary generally pay for a covered physician service from a participating provider?
How is the Part B late enrollment penalty calculated?
Which statement about the Income-Related Monthly Adjustment Amount (IRMAA) is correct?
A beneficiary sees a non-participating physician who does not accept assignment. What limits how much the physician can bill the beneficiary above the Medicare-approved amount?