As with Medicare Part A, you’ll pay a share of the costs for Medicare Part B. You’ll pay a deductible, and depending on the service, you may also pay copays or coinsurance.
What’s your share?
In 2012, your Part B deductible is $140 per year. For coinsurance, in general, Part B pays 80% of the cost and you pay the remaining 20%. However, there are some exceptions to this rule.
There are no limits on your out-of-pocket spending for cost sharing in Part B. If you have a chronic condition that requires a lot of care, or if you have a serious illness, your cost-sharing amounts may be substantial.
Phrases to know
Medicare-approved amount
Original Medicare (Parts A and B) covers thousands of specific medical procedures and decides how much it is willing to pay for each of them. The amount Part B will pay for any given procedure is called the “Medicare-approved amount.”
When you pay your share, the amount you are splitting with Part B is usually the Medicare-approved amount. In some cases, though, your share may be more than 20% of the Medicare-approved amount.
Accepting assignment
Most doctors agree to take Medicare’s payment of the Medicare-approved amount as full payment. This is called “accepting assignment.” If your doctor accepts assignment, your share is limited to 20% of the Medicare-approved amount.
Excess charges
Some doctors, though, do not agree to take the Medicare-approved amount as full payment. Medicare reduces the Medicare-approved amount for these doctors by 5%. Part B also allows these doctors to charge you up to an additional 15% of the reduced Medicare-approved amount. (This ceiling is less than 15% in some states, and some states prohibit additional charges completely.) This is called “balance billing” or “excess charges.”
These charges apply only to certain services and not to others (like certain medical supplies and equipment you may need). Where excess charges are permissible, you are responsible for paying them.
Coinsurance percentages
The cost-sharing percentage for Medicare Part B is not always 20%. For outpatient mental health services, for example, your 2012 coinsurance is 40%.
Copays
Some cost sharing in Medicare Part B uses copays instead of coinsurance. In these cases, Medicare sets a dollar amount that you will pay for each service or product you use.
“Usual and customary” fees
The “Medicare-approved” amount for a service is usually different from the amount a health care provider would charge a non-Medicare patient for the same service. That amount is often referred to as the provider’s “usual and customary” fee. A provider’s invoice may show the usual and customary fee, but that amount is not used to calculate the amounts either you or Medicare will pay.
Example: doctor who does accept assignment
| Ellen visited a doctor who accepts assignment. Ellen has already paid her deductible for the year. |
|---|
| Interpret cardiovascular stress test |
$175 |
| Read diagnostic x-ray |
$125 |
| Doctor's usual and customary fee |
$300 |
| Total Medicare-approved amount |
$220 |
| Medicare pays 80% of approved amount |
$176 |
| Ellen's 20% coinsurance |
$44 |
| Total Ellen pays |
$44 |
Example: doctor who doesn't accept assignment
| Ellen visited a doctor who accepts assignment. Ellen has already paid her deductible for the year. |
|---|
| Interpret cardiovascular stress test |
$175 |
| Read diagnostic x-ray |
$125 |
| Doctor's usual and customary fee |
$300 |
| Total Medicare-approved amount |
$220 |
Reduced Medicare-approved amount
(95% of Medicare-approved amount) |
$209 |
Medicare-approved amount
+ 15% of approved amount |
$240 |
| Medicare pays for 80% of approved amount |
$176 |
| Ellen's 20% coinsurance |
$42 |
| Ellen's 15% "excess charge" |
$31 |
| Total Ellen pays (coinsurance + excess charge) |
$73 |
Note: Even though this doctor doesn’t accept assignment, Medicare still limits the excess charges you must pay to 15% of the Medicare-approved amount. The doctor receives $240. This is less than the usual and customary fees of $300 but more than the Medicare-approved amount.