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Health Insurance Deductible: What Is It and How Does It Work?

A deductible is the amount of money that you must pay out-of-pocket before your insurance plan begins to pay. If you’re on Medicare, you could be responsible for several different deductibles. You make more informed decisions on your coverage, and avoid being surprised by medical bills once you understand the Medicare deductibles.

What’s the Difference Between a Deductible vs Copay?

A copay is a set amount that you have to pay for certain services even once you’ve paid your deductible. For instance, even after you’ve met your deductible and your coverage is active, you may have to pay $20 each time you see your doctor. The money you spend paying for copays may or may not be counted towards you meeting your deductible.

What is the Medicare Deductible?

Your coverage under Original Medicare is categorized by Medicare Part A and Part B, and they each have their own deductible. Keep in mind that if you only have Original Medicare, you’ll still have out-of-pocket costs even after you hit the deductibles. Original Medicare typically only covers 80% of the bill, and you’re responsible for other costs like the 20% coinsurance and copays.  

Medicare Part A Deductible

Medicare Part A, your inpatient hospital coverage, has a deductible of $1,408 in 2020 for each benefit period. For example, if you’re admitted to the hospital for any reason, you must first pay $1,408 out-of-pocket before Medicare begins paying for anything related to your inpatient health coverage costs. The benefit period renews once you haven’t been admitted as an inpatient for 60 days in a row, so you could have to pay the deductible more than once a year.

Medicare Part B Deductible

The Medicare Part B deductible in 2020 is $198. This is an annual deductible, and it resets each calendar year. You’ll have to pay this deductible for any service that Part B would typically cover, such as doctor visits, outpatient therapy, and durable medical equipment.

Medicare Supplement Plans

If you have a Medicare Supplement plan, you may not need to pay any deductibles for Original Medicare. Medigap plans, as they’re also known, are an additional form of insurance that you can purchase to cover the costs left over from Original Medicare.   

Medicare Supplement plans are available in different levels of coverage. For instance, Medicare Supplement Plan F covers both the Part A and Part B deductible, the 20% coinsurance, and the other out-of-pocket costs. Plan G, on the other hand, covers the same expenses except for the Part B deductible. If you have Plan G, you’ll receive a bill for your outpatient services until you’ve paid $198 for the year. After you’ve met the deductible, you won’t have any other out-of-pocket expenses for approved services.

What is the Medicare Part D Deductible?

Medicare Part D is your prescription medication insurance, and plans are available from different carriers. The deductible may change from plan to plan, but it can’t exceed $435 in 2020. You must meet your annual deductible before you start to receive the benefits of your Part D prescription drug benefits. This means that the amount you pay out-of-pocket for the same medications may vary throughout the year as you work towards meeting your deductible.

What is the Medicare Advantage Deductible?

Medicare Advantage plans are a form of private insurance that act primary instead of Original Medicare. Each carrier can set its own deductible amount for a plan, and some plans offer $0 deductibles. However, if you select a plan with a $0 deductible, don’t assume that you won’t have any out-of-pocket expenses. You should review your plan for details on copayments, coinsurance, and out-of-pocket maximum limits.

If you’re comparing insurance options, you should check to see what the deductibles are. Deductibles aren’t the only form of out-of-pocket costs that you can encounter, but knowing all of your costs can help you with your decision-making process. If you like the coverage and benefits of Original Medicare but are concerned with the deductibles and the other gaps, a Medicare Supplement plan may be a good fit for you.

Nothing on this website should ever be used as a substitute for professional medical advice. You should always consult with your medical provider regarding diagnosis or treatment for a health condition, including decisions about the correct medication for your condition, as well as prior to undertaking any specific exercise or dietary routine.

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