What is Medicare Part B?

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Many refer to Medicare as “alphabet soup”, and Part B is one letter of this. Medicare Part B is one part of Original Medicare, which is made up of Part A and B. While Part A is hospital insurance, Part B is medical insurance, covering doctor and outpatient costs.  

What does Medicare Part B Cover?

Medicare Part B covers medical services and supplies that are medically necessary. This includes outpatient care, preventative services, ambulance services, mental health services, physical therapy, etc. For a full list of services covered under Part B, look to the Medicare handbook “Medicare and You”.

If you decided to opt-out of Original Medicare and go into a Medicare Part C Medicare Advantage plan, you will not get your Part B coverage through Medicare, but through a private company. By law, these Medicare Advantage Plans must offer at least the same level of coverage as Original Medicare, so all the services and supplies listed above will be covered, you might just have to go to specific doctors or hospitals to get it.

Who is eligible for Medicare Part B?

Anyone eligible for Part A is eligible for Part B. To be eligible for Part A, an individual must be entitled to Medicare based on their own earning record or that of a spouse, parent, or child. This requires working and paying Medicare payroll tax for at least 40 quarters, or 10 years. In many cases, if you are already receiving Social Security Benefits, you will automatically get Part A and Part B coverage the first day of the month you turn 65. If you are not automatically enrolled, you must enroll during your Initial Enrollment Period.

You may also qualify for Medicare Part B if you are receiving Social Security disability benefits. If you are under 65, you will automatically be enrolled in Parts A and B after 24 months of disability.  

If you have ALS or end-stage renal disease, you may also be eligible for Medicare Part B.

Enrolling in Medicare Part B

As mentioned above, if you are already taking Social Security benefits,  you are automatically enrolled in Medicare Part A and Part B.  If not automatically enrolled, you must enroll during your Initial Enrollment Period,which is the 3 months before and the 3 months after your birth month, as well as your birth month, totaling 7 months.  

There are also Special Enrollment Periods, which are triggered when events, such as losing work coverage, occur. Since you have to pay a premium for Part B, you are not penalized for not signing up when you have other creditable coverage. You must sign up within 8 months of losing coverage to not receive any penalties.

The Annual General Enrollment Period, which lasts from January 1st – March 31st, is when you can sign up if you did not sign up during your Initial Enrollment Period or a Special Enrollment Period. If you sign up during this time, coverage will not start until July 1st. You usually have to pay a late enrollment penalty for not signing up when you were first eligible.

It is important to remember that once you sign up for Part B, your 6 month Open Enrollment Period for Medicare Supplements starts. This period is when you can sign up for a Medicare Supplement without any health questions, which guarantees you get the best coverage for the best price. Make sure to compare companies when shopping for a supplement: the plans are standardized – the only thing that varies between them is the price.

How much does Medicare Part B cost?  

Medicare Part B does have a premium, which can change every year. Currently it is $134 a month. This price is regularly only paid by new enrollees to Medicare  due to Social Security’s “hold harmless” provision. This provision states that Medicare Part B premiums cannot be raised higher than Social Security’s Cost of Living Adjustment each year, resulting in about a quarter of Medicare beneficiaries not paying the full $134.  High earners pay more than $134 due to IRMAA, or the Income Related Monthly Adjustment Amount.

The annual deductible for Medicare Part B is $183 in 2018. Only one Medicare Supplement plan covers this, which is Plan F. Otherwise, most Medicare beneficiaries pay this themselves.

Medicare beneficiaries are also responsible for 20% coinsurance for most covered services as Medicare only covers 80%. Medicare Supplements are there to fill this gap. Medicare supplement prices vary by plan, age, gender, location, and smoking status. You can compare Medicare Supplement prices in your area without giving away any personal information on Cardinals site.

Medicare Part B is only one piece of the Medicare puzzle. To learn more about the other parts of the puzzle, go here or call Cardinal Advisors at 919-535-8261.

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What is Medicare Part B?

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Understanding the Upcoming 2026 Income Tax Increase: What You Need to Know

A Brief History of the Tax Cuts and Jobs Act (TCJA)

In today’s Cardinal lesson, we’re discussing the significant changes coming to income tax rates in 2026. This isn’t a proposal but a law already set in motion. The Tax Cuts and Jobs Act (TCJA), passed in 2017 and effective from January 1, 2018, brought about substantial reductions in income taxes. However, these reductions were only funded for eight years, meaning they will expire at the end of 2025.

What Changes to Expect in 2026

As of January 1, 2026, the tax rates will revert to their 2017 levels, adjusted for inflation. Key changes include:

  • The 12% bracket will increase to 15%.
  • The 22% bracket will rise to 25%.
  • The top rate of 37% will revert to 39.6%.

Not Just a Proposal

It’s crucial to understand that this change is already the law. Many people mistakenly believe that the tax rate increases are still under discussion. However, unless Congress enacts new legislation, these higher rates will take effect as scheduled.

Implications for Your Financial Planning

Impact on IRAs and 401(k)s

With the current lower tax rates, now is the time to consider strategies like Roth conversions. By converting funds from a traditional IRA to a Roth IRA now, you can potentially save a significant amount in taxes over the long term.

Why Planning Ahead is Crucial

For individuals with substantial retirement savings, understanding these changes is vital for effective tax planning. The window to take advantage of the current lower tax rates is closing, and planning ahead can make a significant difference.

Case Studies and Planning Opportunities

Hans Scheil and Tom Griffith discuss specific case studies and planning strategies in our latest video. These examples illustrate how different scenarios can be managed effectively:

  • Case Study 1: A married couple with an adjusted gross income of $150,000 in 2024 can convert part of their IRA to a Roth IRA, taking advantage of the lower current tax rates.
  • Case Study 2: High-net-worth individuals with large IRAs can save substantial amounts in taxes by planning conversions over the next two years.

Estate Tax Considerations

The TCJA also doubled the estate tax exemption, which will revert in 2026. This change can significantly impact high-net-worth individuals, making estate planning more crucial than ever.

Action Steps to Take Now

  • Review Your Current Tax Situation: Analyze how the upcoming changes will affect your finances.
  • Consider Roth Conversions: Take advantage of the lower tax rates before they expire.
  • Plan for Estate Taxes: Assess your estate plans in light of the changing exemptions.

Conclusion

The changes coming in 2026 are significant, but with proper planning and informed decision-making, you can navigate these changes effectively. Watch our video for more detailed insights and personalized advice.

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Contact us today with any questions, concerns, or just to stay connected.

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