If you’ve ever reviewed or had a health insurance plan, whether that’s a private plan or Medicare, you’ve likely seen or dealt with a deductible. They’re very common in insurance plans. So common, in fact, that you may have never even stopped to think about what they are exactly. How do they influence your coverage? Do you not receive coverage until you’ve reached that deductible or are you always receiving coverage?
These are fairly important questions, and the answers can change your mind about which plans to choose. At the same time, since deductibles are such a common element of health insurance, you may have been embarrassed to ask. Well, there’s no such thing as a dumb question if it teaches us something new. So, let’s break down exactly what deductibles are and how you may encounter them with Medicare.
What are Deductibles?
Within insurance, deductibles are a set amount you must pay before the insurance plan’s coverage kicks in. You can find deductibles in many kinds of insurance coverage. While they are often a set dollar amount, like $200 or $1,484, they are sometimes a percentage of the overall value of the insured item, like that for property or certain types of environmental risks. In order to receive the full extent of coverage that your insurance plan offers, you’ll need to reach this limit with applicable payments from services. For example, let’s say you have a home insurance plan with a deductible of $2,000. Your home is damaged and the cost to fix everything comes out to $50,000. Once you pay your deductible, your plan could pay the remaining $48,000, depending on your policy and qualifying costs.
While the majority of health services require the deductible to be met to receive full coverage, some things may be covered prior to meeting your deductible.
For health care services, does this mean that you’ll be stuck paying for all your costs until you hit that deductible? Not necessarily. While the majority of health services require the deductible to be met to receive full coverage, some things may be covered prior to meeting your deductible. This will differ depending on the insurance plan, so it’s a good idea to do a little research before signing on to a specific plan. For Medicare beneficiaries, we can go into some more specifics that may help you make decisions about your coverage.
Original Medicare Deductible
In Original Medicare, there are two deductibles you’ll encounter. In Medicare Part A, there’s an inpatient hospital deductible that you’ll owe each benefit period. In 2021, this deductible is set at $1,484. Once you’ve paid that much for inpatient health services in a single benefit period, your Medicare coverage will kick in. In Medicare Part B, the other half of Original Medicare, there’s a general deductible. Once you’ve paid enough applicable services, Medicare Part B will cover 80 percent of the Medicare approved amount, and you’ll only owe the remaining 20 percent. The Part B deductible is $203 for 2021.
This doesn’t mean that you’ll have no coverage or benefits from your Medicare plan prior to reaching your deductible. Some services are covered before you reach it, like preventative care. This includes services like your annual Wellness visit or the flu shot. You can see which services are covered before the deductible and after it here. Of course, there’s another way you benefit from your Medicare plan before reaching your deductible. If you’re using a doctor or health service that accepts Medicare assignment, they’ve agreed to charge you at an agreed upon price. This price is usually lower than what the health care provider would normally charge for those services. In this sense, you’re already receiving benefits from your Medicare coverage, even if you haven’t reached your deductible yet.
While it’s unlikely you’ll qualify for a plan that covers the Part B deductible (unless you were eligible for Medicare prior to January 1, 2020), most Medigap plans offer some coverage of the Part A deductible.
There’s a final way you can get around the Part A and maybe even Part B deductibles, and that’s by picking up a Medicare Supplement (also known as Medigap plans). While it’s unlikely you’ll qualify for a plan that covers the Part B deductible (unless you were eligible for Medicare prior to January 1, 2020), most Medigap plans offer some coverage of the Part A deductible. Medigap Plan A is the exception as it does not help with the Part A deductible. The remaining plans offer at least partial coverage of the Part A deductible. Plans K, L, and M help cover 50 percent, 75 percent, and 50 percent of it, respectively, while the rest cover it in full.
Medicare Advantage and Part D Deductibles
Similarly, most Medicare Part C (also called Medicare Advantage) plans have an annual deductible. Since Medicare Advantage plans are offered by private insurance companies as alternatives to Original Medicare, these plans may have differing deductibles. As Original Medicare alternatives, they’re required by the Centers for Medicare & Medicaid Services (CMS) to cover what Original Medicare covers at the bare minimum. You should expect the same pre-deductible services covered as with Original Medicare.
Medicare Part D is a privately offered prescription drug coverage plan that pairs with your Original Medicare coverage. It too will often have a deductible. Much like Medicare Advantage plans, these deductibles will vary from plan to plan. Unlike Medicare Advantage, though, CMS regulates the maximum limit that a Part D deductible can be. In 2021, this is $445. Most plans will fall somewhere below that, with some even having no deductible.
If you’re interested in comparing different plan deductibles in relation to their coverages, you can see actual plan details with the Medicareful plan finder.
When it comes to choosing a plan, whether that’s a Medicare Advantage or Part D plan, the deductible is a worthwhile factor to take into account. Going with the lowest deductible may not be the best call, though. High deductible plans often balance out that initial cost to the beneficiary by having lower premiums or higher coverages once you reach that deductible. If you’re interested in comparing different plan deductibles in relation to their coverages, you can see actual plan details with the Medicareful plan finder.
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Whether it’s about the complex ins-and-outs of Medicare or the basics of your coverage, you never have to be embarrassed to ask a question. You can always reach out to us on Facebook or Twitter, or contact us at firstname.lastname@example.org. Feel free to ask us whatever Medicare questions have been bothering you (though, please don’t publicly share your health information). We’re more than happy to help answer your questions, or with your permission, put you in touch with someone who can. Don’t be ashamed to ask questions and learn more about Medicare. It’s the best way to take a firm grasp of your coverage and your health care!