Medicare Deductible Guide 2019

You paid into Medicare all of your working career. You would think Medicare would be free once you enroll but that’s only partially true. If you’re confused about what you’ll pay for Medicare, we have you covered.

Part A

Part A is sometimes called hospital insurance and for most people, this is the closest thing to free they’ll get from Medicare. Unless you make so much money that the premium wouldn’t matter to you anyway, expect to no monthly premium for Part A.

That doesn’t mean that you aren’t charged a deductible. For each benefit period, you pay the first $1,364 in costs. A benefit period begins when you enter the hospital and ends when you haven’t received any inpatient hospital services for 60 consecutive days. If you re-enter the hospital the day after your benefit period ends, you’re responsible for the first $1,364 of charges again.

Part A also charges coinsurance if your hospital stay lasts more than 60 days. Days 61 to 90 of your hospital stay, you pay $341 per day; Days 91 through the balance of your lifetime reserve days, you pay $682 per day, and once your lifetime reserve days run out, you’re responsible for all costs. Lifetime reserve days are 60 days that Medicare gives you to use if you stay in the hospital for more than 90 days. You only get 60 and they don’t renew.

If you did some simple math, you probably noticed that an extended hospital stay could cost you a lot of money. That’s why it’s important to add a Medicare supplement to your original Medicare plan.

Part B

Part B is considered your medical insurance. It covers medical treatments and comes with a monthly premium of $135.50. A small percentage of people will pay more or less than that amount.

Part B also comes with a deductible of $185 per year. Unlike Part A, your deductible isn’t tied to a benefit period or other complicated formulas. Once you pay your $185, which is likely to happen after your first or second doctor visit or procedure of the year, Medicare pays 80% of the Medicare-approved amount. That leaves you on the hook for only 20%.

Be careful—unlike health insurance coverage you probably had in the past, there’s no cap on the 20%. If your medical bills reach $100,000, you will see bills that total $20,000 assuming you haven’t met your deductible. Again, this is why you need a Medicare supplement.

Part C

Parts A and B are called Original Medicare. As part of what you paid into Medicare throughout your working years, you receive original Medicare and very little cost to you. Although it might feel like you’re paying more than you should, the cost to purchase the same insurance on the open market would be significantly higher when you factor in what will likely be decades of coverage.

Part C is where you begin to have options. Part C, also called Medicare Advantage are plans available for purchase from the private insurance market, that extends Medicare’s coverage. Having some sort of Medicare supplement is highly recommended to avoid the potential out of pocket costs that could come with only having Original Medicare.

Costs and deductibles vary depending on your plan of choice but you will continue to pay your monthly Part B deductible. One of the best advantages of Part C coverage is your small copayment when you visit a doctor versus paying 20% of the cost of the visit if you’re only enrolled in Original Medicare.

There are a lot of options to choose from. Consult with a Medicare expert to help you make the best choice. In general, the higher the costs, the better the coverage and since most people will see their healthcare spend rise as they get older, it's best to get coverage that covers as many contingencies as possible.

Part D

Once you reach retirement age, you’re probably taking at least one prescription medication on a regular basis. Original Medicare doesn’t provide any coverage for prescription medication. That’s where Part D comes in. Like Part C, Part D is offered through private insurance companies but you can compare and enroll from the Medicare website. You will enroll directly through the private insurance company.

Like Part C, each plan has different coverage, deductible, and copayment options. Before signing up with a company, make sure that it covers the drugs you take in one of the lower tiers to keep your costs under control.

You have to enroll in Original Medicare to get Part D coverage or you can enroll in Part C coverage that includes a prescription drug plan.