You Medicare Deductible - What Is It & How It Works
Of all the elements related to Medicare, few are as confusing as Medicare deductibles and other out-of-pocket expenses. How much should you pay, and when? Are there different requirements for the various parts of Medicare? We'll break it down to the basics for you, from what a Medicare deductible is, to changes for the Medicare deductible 2018 amount.
What Is Your Medicare Deductible?
A Medicare deductible is the amount you have to pay out-of-pocket before your benefits kick in and cover your medical expenses. The deductible shouldn't be confused with your copayments and coinsurance, which are separate out-of-pocket expenses. Each Medicare Part and plan has a different deductible that must be reached in order for your coverage to take effect, and the process starts again each benefit period for as long as that you're enrolled in the program.
How Does Your Deductible Work?
Unlike deductibles for private health insurance, Medicare deductibles are set at a standard amount. The only exception to this is Medicare Advantage, which has varying deductibles that affect your monthly premiums, much like with private insurance plans. Prior to the start of each year, Medicare officials evaluate the deductible amounts to decide whether or not to raise them. It's important that you determine if your deductible will increase since it may affect your coverage and costs. It may be more cost-effective to switch to an Advantage plan with a lower deductible if the Medicare increase hurts your finances.
There's an out-of-pocket cap included with your Medicare coverage. That means once you've reached the maximum amount, Medicare pays 100% of your costs within the benefit period. Almost anything you pay that's related to healthcare is counted toward your deductible amount, including:
- Doctor's office visits
- Coinsurance payments
- Lab tests and blood work
- Transportation costs to and from doctor's appointments
There are ways that you can offset all or part of your Medicare deductible to lower how much you're paying out-of-pocket for care. For example, there are 10 Medigap plans that you can purchase from private insurers to supplement your Medicare coverage and reduce your overall healthcare cost. Other insurance coverage you have from unions or pension plans could also be used to defer your costs.
Medicare Deductible 2018
The Medicare deductible 2018 amount for coverage, Parts A and B, are set at $1,340 and $183 respectively. The amount for Medicare Part A deductible is the maximum amount for each benefit period. The Medicare Part B deductible is the total for the calendar year. Deductible amounts for other Medicare Parts and Medicare Advantage plans depends on your individual policy. Your Medicare adviser can help you out with that.
Part A Deductible
Medicare Part A is your hospitalization insurance. Unlike private health insurance and Medicare Part B, the Part A deductible amount resets for benefit periods rather than annually.
The benefit period runs from the first day you're hospitalized and ends 60 days from the date that you're released. That means that if you're hospitalized several times within the same year, you may have to pay the deductible amount of $1,340 during each new benefit period. For example, if you're hospitalized in September and released three days later, you'll be responsible for any expenses up to $1,340 before Medicare takes over the cost.
The 60-day benefit period starts on your release date and runs for 60 days. If you're admitted to the hospital again during that 60-day period, Medicare covers 100% of your cost. However, if you're re-admitted at the end of November, you'll have to meet the deductible again for that new benefit period.
Part B Deductible
Medicare Part B is your basic health coverage for preventative care, office visits, and other routine medical needs. The Part B deductible amount of $183 is an annual amount that runs from the time you enroll until the end of each calendar year. Once your out-of-pocket medical expenses meet the deductible amount, the rest of your eligible medical needs are paid by Medicare.
Using Medigap Plans To Cover Your Deductible
Even a relatively low Medicare deductible can be out of reach for someone living on a fixed income. That's why private insurance companies offer several Medigap plans to help reduce out-of-pocket costs for seniors. There are 10 standard Medigap plans, which are designated by a letter of the alphabet, and one variation of Plan F with a high deductible option. All of these plans must offer Medicare Part A unless it offers plan C or basic F instead.
The coverage is controlled by Medicare, meaning they're the same for any company that offers them, in every state except Massachusetts, Minnesota, and Wisconsin, which have their own standardized Medigap plans. Medigap plans are A, B, C, D, F, G, K, L, M, and N.
All Medigap plans except Plan A pay between 50 and 100% of Medicare Part A deductibles. Plans C and F can be purchased to pay the deductible for Medicare Part B, among other costs. Keep in mind that Medigap plans that pay for Medicare Part B deductibles will no longer be offered after 2019.