Key Takeaways
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Medicare Part B offers essential coverage for outpatient care, but it does not eliminate all your healthcare costs.
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Many enrollees are caught off guard by recurring expenses like monthly premiums, coinsurance, and excess charges that Part B doesn’t fully cover.
Understanding the Scope of Part B Coverage
Medicare Part B is often described as your ticket to outpatient healthcare. It covers doctor visits, preventive screenings, lab tests, durable medical equipment, outpatient surgeries, mental health services, and more. But while it appears broad, the reality is that it comes with a set of financial responsibilities that many people overlook at first.
In 2025, you still need to enroll in Part B separately unless you’re automatically enrolled. Once enrolled, you pay a standard monthly premium, meet an annual deductible, and cover 20% coinsurance for most services after that deductible is met. These are the basics—but the real surprises come from the hidden layers of costs.
The Monthly Premium: Not Optional and Not Flat
Everyone who signs up for Medicare Part B in 2025 must pay a monthly premium. The base amount is fixed for most, but it increases depending on your income. If your modified adjusted gross income (MAGI) from two years ago exceeds certain thresholds, you’re subject to an Income-Related Monthly Adjustment Amount (IRMAA).
The Social Security Administration looks back at your 2023 tax return to determine whether you fall into a higher bracket. If you do, you pay more each month—sometimes substantially more.
Annual Deductible Before Coverage Kicks In
Medicare Part B also requires that you meet an annual deductible before it starts paying its share. In 2025, this deductible is $257. That means for your first medical expenses of the year, you’ll pay the full amount out of pocket until this threshold is met.
Although this may seem manageable, many people forget to budget for this when estimating their yearly medical costs. It resets every January.
The 20% Coinsurance That Adds Up
After meeting the annual deductible, you’re responsible for 20% of the cost of covered services. Medicare pays 80%. There’s no cap on what that 20% can total across the year unless you have other coverage to limit your out-of-pocket expenses.
For example:
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A single outpatient procedure could leave you with hundreds in coinsurance.
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Ongoing therapy or specialist visits can accumulate into thousands.
Unlike many employer health plans, Medicare Part B does not include an annual out-of-pocket maximum, leaving you financially exposed.
Excess Charges: An Unexpected Surprise
Doctors who accept Medicare but don’t agree to Medicare’s approved payment amount can bill you for what’s known as an excess charge. In 2025, this can be up to 15% more than the Medicare-approved amount for a given service.
While many providers do accept Medicare assignment (which means they take the Medicare-approved amount as full payment), some don’t. If you receive care from one who doesn’t, you could be responsible for both your 20% coinsurance and the extra 15% in excess charges.
This is a detail easily missed when choosing providers.
No Coverage for Most Prescription Drugs
It’s important to note that Medicare Part B does not cover most prescription medications you take at home. It covers only specific drugs administered in a clinical setting—like infusions or certain injectable medications.
If you need routine medications, you’ll need separate prescription drug coverage. Many assume their medications are included under Part B and are caught off guard when they visit the pharmacy.
Limits in Foreign Travel Coverage
Traveling outside the United States? Medicare Part B provides virtually no coverage for outpatient or emergency services you receive while abroad.
There are very few exceptions, and those typically involve situations where a foreign hospital is closer than a U.S. facility for emergency care. Unless you have additional coverage, medical costs incurred internationally are entirely your responsibility.
Preventive Services Are Covered—But Not Everything Is Free
While Medicare Part B does cover many preventive services, such as screenings and annual wellness visits, not all associated costs are waived.
Here’s how it breaks down:
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The annual wellness visit is covered, but any treatment or diagnostic service ordered during that visit may trigger coinsurance.
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Some lab tests are covered in full, while others come with shared costs.
This can lead to unexpected charges from what you assumed was a free checkup.
Medical Equipment and Home Health Costs
Durable Medical Equipment (DME)—like wheelchairs, walkers, or oxygen equipment—is covered under Part B, but again, only 80% of the Medicare-approved amount. You pay the other 20%, plus any excess charges if applicable.
Home health care is covered under specific conditions, but only if you meet eligibility criteria. Even then, you may still owe coinsurance for associated equipment or services.
Outpatient Mental Health Coverage Has Conditions
In 2025, Part B covers outpatient mental health care, including:
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Individual and group therapy
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Psychiatric evaluations
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Medication management
But like other services, you pay 20% coinsurance, and some providers may charge excess fees. Additionally, coverage doesn’t extend to certain support services or long-term counseling not deemed medically necessary.
This can become especially relevant for those managing chronic mental health conditions.
Ambulance Services Come at a Cost
If you require ground or air ambulance transportation, Medicare Part B does offer coverage—but not without a price. Once your deductible is met, you still pay 20% of the cost.
For medically necessary transport, this can mean hundreds of dollars out of pocket. And if Medicare decides your transport wasn’t medically necessary? You could be responsible for the entire bill.
Annual Income Review May Affect Future Costs
Each year, your Part B premium may increase if your income rises. The SSA continues to review your tax returns from two years prior, so your 2025 premiums reflect your 2023 income.
If your income changes due to retirement, divorce, or other events, you can request a reconsideration. Still, many are unaware of this mechanism and end up overpaying because they didn’t report qualifying life changes.
Supplementing Part B: A Necessary Strategy for Many
Because Medicare Part B leaves you responsible for 20% coinsurance and doesn’t have an annual out-of-pocket cap, many people choose to get additional coverage. This could include:
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Medicare Advantage plans (Part C) with built-in cost protections
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Standalone Medicare Supplement Insurance (Medigap) to help cover deductibles and coinsurance
However, these options must be evaluated carefully based on your needs and enrollment timelines. Missing the right window could limit your options or raise your future costs.
Timing Your Enrollment to Avoid Penalties
Another critical cost factor with Part B is the late enrollment penalty. If you don’t sign up when you’re first eligible and you don’t have other creditable coverage, you’ll face a lifetime monthly penalty.
This penalty grows the longer you delay and is added to your monthly premium. For every 12-month period you go without Part B coverage after eligibility, your premium increases by 10%—permanently.
Hidden Costs Don’t Mean You Should Skip Coverage
Despite these hidden costs, skipping Medicare Part B is rarely a good idea. Without it, you may lack essential coverage for doctors’ services, preventive care, outpatient procedures, and more.
The key is to understand your cost responsibilities and make a plan that fits your budget and healthcare needs.
Plan Ahead and Ask for Help
Understanding what Medicare Part B covers—and what it doesn’t—is crucial to managing your healthcare in retirement. Costs like premiums, deductibles, coinsurance, and excess charges can sneak up on you.
Speak with a licensed agent listed on this website to make sure you’ve considered all your options and enrolled in the right mix of coverage for your situation.
