Medicare Part B Explained

Medicare Part B is medical insurance. It helps pay for doctor services, outpatient care, preventive services, and certain medical supplies. While Part B is a critical part of Medicare coverage, it does not work like employer insurance—and misunderstanding it is one of the biggest reasons people end up with unexpected medical bills.

 

Let’s walk through how it actually works.

 

What Medicare Part B Does Cover

Medicare Part B generally covers medically necessary services such as the following:

• Doctor visits (primary care physicians and specialists)
• Outpatient medical services
• Preventive care (annual wellness visits, screenings, lab work)
• Durable medical equipment (walkers, wheelchairs, oxygen, etc.)
• Outpatient mental health services
• Ambulance services (when medically necessary)
• Some home health services
• Certain hospital services when you are considered outpatient or under observation status

Important note: Medicare Part B is not limited to a doctor’s office. Depending on how your care is billed, Part B can apply even while you are physically in the hospital.

What Medicare Part B Does Not Cover

Medicare Part B does not cover everything. Common exclusions include:

• Prescription drugs you take at home (covered under Part D)
• Routine dental care (cleanings, fillings, dentures)
• Routine vision exams and eyeglasses
• Hearing exams and hearing aids
• Long-term custodial care (such as nursing home stays)
• Cosmetic procedures
• Most care received outside the United States

Because of these gaps, many people choose to add a Medigap plan or a Medicare Advantage plan.

The Medicare Part B Deductible

Before Medicare starts paying its share, you must meet the annual Medicare Part B deductible, which is $283 this year.

• You pay 100% of Medicare-approved services until the deductible is met
• The deductible resets every calendar year

Once the deductible is satisfied, Medicare begins sharing costs with you.

The 80/20 Coinsurance Rule

After the deductible is met:

• Medicare pays 80%
• You pay 20%

This 20% coinsurance applies to most Part B services, including doctor visits, outpatient procedures, imaging, and lab work.

There is no maximum out-of-pocket limit with Original Medicare alone, meaning that 20% responsibility can continue indefinitely.

Billed Amount vs. Medicare-Approved Amount

This is one of the most misunderstood parts of Medicare.

• The billed amount is what a provider charges
• The Medicare-approved amount is what Medicare says the service is worth

Medicare bases payment only on the approved amount—not what the provider bills.

Example:

• Doctor bills: $300
• Medicare-approved amount: $200
• Medicare pays 80% of $200 = $160
• You pay 20% of $200 = $40

The difference between what was billed and what Medicare approved is where additional costs may come into play.

What Are Medicare Excess Charges?

Some doctors do not accept Medicare assignment.

When this happens, Medicare allows the provider to bill up to 15% more than the Medicare-approved amount. This additional amount is known as a Medicare excess charge.

According to CMS, approximately 98% of doctors nationwide accept Medicare assignment, meaning they agree to Medicare’s approved amount and do not charge excess charges. While excess charges are relatively uncommon, they are still allowed under Medicare rules and can apply in certain situations.

Key points to understand:

• Excess charges are legal under Medicare rules
• Medicare does not pay excess charges
• You are responsible for them unless you have coverage that pays them

Example:

• Medicare-approved amount: $200
• Maximum excess charge (15%): $30
• You could owe:
  • $40 (20% coinsurance)
  • Plus $30 (excess charge)
• Total out of pocket: $70

Why You May See Part B Bills from a Hospital

You may receive Part B charges even when services are provided in a hospital setting. This commonly happens with:

• Emergency room visits
• Observation stays
• Outpatient procedures
• Lab work, imaging, and physician services provided during a hospital visit

In these situations, Medicare Part B applies based on how the service is classified, not the building you are in.

Why Understanding These Gaps Matters

Medicare Part B provides essential medical coverage, but it leaves gaps:

• A $283 annual deductible
• Ongoing 20% coinsurance with no out-of-pocket cap
• Potential excess charges (even if uncommon)
• No routine dental, vision, hearing, or prescription drug coverage

Understanding these gaps is critical to avoiding surprise medical bills and choosing the right supplemental coverage.