Understanding Medicare Deductibles
If you’ve had health insurance before, you may be familiar with how deductibles work. Medicare Part A and Part B both have deductibles, as well as other out-of-pocket costs such as copayments and coinsurance.
In 2023, the Medicare Part A deductible is $1,600 per benefit period, and the Medicare Part B deductible is $226 per year.
In this review, we detail how Medicare deductibles work, and we outline how a Medicare supplement insurance plan from Mutual of Omaha Insurance Company (Mutual of Omaha) can partially or fully pay for your Medicare deductibles.
What Is a Deductible?
A deductible is the amount of money you must spend on covered care before your Medicare benefits kick in. Deductibles typically operate on an annual basis and reset at the beginning of every plan year.
For example, let’s say you have a health insurance plan with a $1,000 deductible. That means the first $1,000 worth of covered care must come out of your own pocket. Your plan coverage will begin only after you have spent that amount out of your own pocket.
If you obtain health care and are billed for $1,500, you will be responsible for paying the first $1,000 of that bill. Once you satisfy your deductible by paying $1,000, you and your plan will then split the cost of the remaining $500 using either copayments (flat fees) or coinsurance (percentages of the cost).
What Is the New Deductible for Medicare Part A?
Medicare deductibles typically increase every year. As noted above, the 2023 Medicare Part A deductible is $1,600 per benefit period. In 2022, the deductible was $1,556.
While deductibles traditionally operate on an annual basis, the Medicare Part A deductible is based on a “benefit period” and resets after each benefit period has passed.
A benefit period begins the day you are admitted to a hospital or other facility as an inpatient and ends when you have gone 60 consecutive days without receiving any inpatient care.
For example, let’s say you are admitted to the hospital for inpatient care. Your benefit period now begins, and you’re responsible for paying the first $1,600 in covered costs before your Part A benefits kick in.
Continuing the example, consider you’re discharged from the hospital after 20 days. After 30 days at home, you must return to the hospital and are again admitted as an inpatient. You are still within your benefit period because you only went 30 days without inpatient care. You do not have to pay the Part A deductible again for your hospital stay, and your Part A benefits kick in on day one.
However, let’s say after being released from your first hospital stay, you remained at home for 70 days before being re-admitted as an inpatient. Because you went more than 60 days without needing inpatient care, your first benefit period has expired. You will now begin a new benefit period, which means you must now pay the Part A deductible again before your Part A benefits kick in.
Theoretically, you could be subjected to multiple Part A deductibles throughout the year if you were admitted as an inpatient at multiple different times during the year.
Nearly all Medicare supplement insurance (Medigap) plans fully or partially cover the Medicare Part A deductible, including the popular Medigap Plans F, G and N.
In exchange for a monthly premium for one of these Medigap plans, you won’t have to pay the Medicare Part A deductible, no matter how many benefit periods you may be subjected to.
If you are admitted as an inpatient just one time in a year, you will be forced to pay the $1,600 Part A deductible, which equals roughly $133 per month. A Medicare supplement insurance plan can save you money if you’re admitted to the hospital, particularly if the plan costs less than $133 per month.