Even if you’re familiar with the basics of Medicare, you might wonder why Original Medicare and Medicare Advantage (MA) beneficiaries have to pay a deductible.
A deductible is one of the three general categories of out-of-pocket costs Medicare members incur:
You pay – or paid – a deductible when visiting a provider or purchasing prescription medications using your employer-sponsored insurance plan. This is also the case for Medicare Part A (hospitalization coverage) and Part B (physician services).
For 2021, the Part A deductible is $1,484. By comparison, the average night in many American hospitals costs more, depending on the state you live in.
With Original Medicare (Parts A and B), you must pay the deductible for each so-called benefit period. If you are hospitalized more than once in a year, you’ll have to pay the deductible each time.
This period begins on Day 1 of admission to a hospital or a skilled nursing facility. It ends after you have not spent the night in either for 60 consecutive days. After that, if you are readmitted to the hospital, you trigger a new Part A benefit period – and a new deductible.
Then there’s Part B. It covers most inpatient and outpatient doctor visits, as well as durable medical equipment you rent or buy, if the provider considers it medically necessary. Examples of durable medical equipment are blood sugar test strips, crutches, walkers and wheelchairs.
For 2021, the Part B deductible is $203, an increase of $5 from 2020. Unlike Part A, there are no benefit periods.
Once your Medicare deductible has been met, coinsurance is the second out-of-pocket cost you pay. Together, your portion and your insurance company’s portion cover 100% of the cost of care.
Medicare deductibles and coinsurance costs (as well as premiums) are adjusted annually per the Social Security Act.
Here’s an example of how it works. Say your coinsurance is 30%. This means you’ll pay 30% of the cost of your covered healthcare expenses. Your insurer will pay the other 70%. As the numbers suggest, the higher your coinsurance amount, the more you have to pay for your healthcare coverage.
Whether it’s Medicare, individual or employer group coverage, you will have to pay out-of-pocket for any care not covered by the plan.
The third out-of-pocket expense you’ll incur with Medicare is the copay. This is what your provider charges you for each visit, or for each prescription drug.
Part A and Part B copay amounts vary for hospital and provider visits. These are often set at $20, as is the copay for durable medical equipment covered under Part B.
(Part C, Medicare Supplement Plans, and Part D, prescription drug plans, have their own copays.)
Remember that these out-of-pocket expenses, like premiums, change from year to year.
If you meet Medicare’s low-income criteria, you may qualify for the Extra Help program and receive assistance from Medicare with copays.
And as always, we’re here to answer any questions you may have about Medicare plans, expenses, and programs.
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