Do you know the difference between the Medicare deductible, co-pay, and co-insurance? Sometimes, trying to understand Medicare benefits can feel like you’re reading another language. But if you don’t understand the Medicare deductible, you can’t figure out the true cost of your healthcare. And if you don’t understand your out-of-pocket costs, how can you lower them?
In this post, we explain the different costs associated with your Medicare plan, including the very confusing Part A benefit period.
What Is the Medicare Deductible?
As with most types of insurance, beneficiaries have certain costs before Medicare begins paying. The Medicare deductible is the amount you must pay each benefit period before your Medicare benefits kick in. The deductible amount changes every year. And, it varies according to which plan you choose.
Medicare Part B Deductible
If you have Medicare Part B, you must pay your deductible once every calendar year. In 2019, the amount is $185. Once you meet that yearly obligation, Medicare Part B pays for covered outpatient services (minus your co-insurance; more on that below).
Medicare Part A Deductible
With Part A, the benefit period is different. You can have multiple benefit periods in a single calendar year, which means you can pay multiple deductibles. The deductible in 2019 is $1,364.
The Part A benefit period begins the day you are admitted to the hospital and ends 60 days after your discharge, assuming you do not require covered care as a hospital inpatient or at a skilled nursing facility. If you are admitted to the hospital on day 60, you do not have another deductible, because you are still within the benefit period. If you are admitted to the hospital on day 61, you do, because the previous benefit period ended.
For example, John is admitted to the hospital on June 4 and discharged on June 7. His benefit period begins June 4 and lasts through August 6, a full 60 days after his discharge date. If John is readmitted at any point between these dates, he does not pay another deductible. If John is readmitted after August 6, he has a second $1,364 deductible and a new benefit period begins.
Medicare Advantage and Part D Deductibles
Your Advantage or prescription drug plan may also charge a deductible; details vary per plan. Check with your provider to determine costs and guidelines.
What is Medicare Co-Insurance?
Medicare uses the term co-insurance to describe your portion of covered healthcare expenses.
Medicare Part B Co-Insurance
Under Part B, covered services carry a pre-determined, Medicare-approved cost. Your Part B insurance pays 80 percent of the approved amount. You are responsible for the remainder.
If your provider charges more than the Medicare-approved amount, you are also responsible for any difference. For example, if Medicare sets the approved rate at $100, they will pay $80 of the cost. If your provider charges $110, your share is $30 (20 percent of $100 plus $10 for amount over the approved rate).
Medicare Part A Co-Insurance
Under Part A, your co-insurance amount depends on the number of days you spend as an inpatient. As with the deductible, the benefit period applies. During your first 60 days, you have zero cost for co-insurance. Co-insurance payments begin on day 61:
- Days 61 through 90: $341 per day
- Day 91 through your lifetime reserve days (these are the additional days Medicare covers for hospital stays that last longer than 90 days; you get 60 total lifetime reserve days throughout your life): $682 per day
Once you use your lifetime reserve days, you pay 100 percent of inpatient care costs. If you have a Medigap plan, you get an additional 365 lifetime reserve days.
What Is a Medicare Copay?
Co-pay refers to a fixed dollar amount for services, not the percentage charged by co-insurance. These costs are common with Medicare Advantage and Part D plans. Less common are plans that charge both a co-pay and co-insurance, but they are out there.
Your co-pay may be $15 for primary care visits and $30 for specialists. You may also see higher co-pays for seeing out-of-network providers. Under Part D, you typically have a co-pay for covered drugs, with most plans including a tiered co-pay schedule. Under the tiered plan, generic and other preferred drugs have a lower co-pay. You pay a higher amount as you move up the tier.
Medicare Out-of-Pocket Limits
Out-of-pocket limits refer to amount you must spend before your insurer covers 100 percent of your covered healthcare services. Typically, this includes co-pays and co-insurance. Some plans include the yearly deductible, but monthly premiums rarely count toward out-of-pocket costs.
Original Medicare (Parts A and B) does not have a maximum out-of-pocket limit. If you have a major illness, your costs could be significant, which is why we recommend a Medigap plan for Original Medicare recipients.
Medicare Advantage Out-of-Pocket Maximums
If you have Medicare Advantage (MA), you do get out-of-pocket limits. The amount varies according to plan and provider, but the federal maximum for 2019 is $6,700.
Again, expenses that count toward your maximum typically include co-pays and co-insurance but not premiums. In addition, MA plans generally do not count amounts spent with out-of-network providers. Check with your provider for details.
Medicare Part D Out-of-Pocket Maximums
Even if you reach your yearly limit through your MA plan, you still have Part D co-payments. If your prescription expenses cost you and your Part D plan a combined total of $3,820 (the amount changes every year), you enter the donut hole. You only leave the donut hole once your out-of-pocket costs for the year total $5,100. From there, your plan pays 100 percent of your covered prescription drug costs.
If you’d like to learn how you can save more on your Medicare costs, call 855-350-8101 to speak to one of our licensed agents.
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