Understanding the expenses associated with Medicare is crucial for choosing the right Medicare insurance plan for you. You need to consider your Medicare premiums, copayments, and coinsurance expenses before enrolling.
A Medicare beneficiary under Original Medicare will have different out-of-pocket and deductible expenses than a beneficiary enrolled in a Medicare Advantage Plan.
On Oct. 12, 2023, the CMS released the 2024 premiums, deductibles, and coinsurance amounts for Medicare Part A and Part B and 2024 Medicare Part D income-related monthly adjustment amounts.
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What is a Health Insurance Deductible?
Deductibles are the amount you need to pay out-of-pocket for health care services before your plan starts coverage. In most cases, the insured pays 100% of the costs until the deductible is reached.
Let’s look at an example of how deductibles work.
Larry goes to his doctor for his annual physical, considered preventive care. His plan covers 100% of preventative care, so his plan’s $250 deductible is still intact.
Later in the year, Larry is skiing, taking a wrong turn, and hurting his knee. He goes to the doctor to examine it, and the doctor’s visit and incidentals cost $375.
Because his deductible is still intact, he has to pay $250; the plan will pay the rest. He will also need a knee brace while the knee heals. Now that Larry has met his deductible, he will only pay 20% coinsurance for the knee brace.
What is Coinsurance & Copay for Medicare?
Coinsurance is the percentage of a medical bill that Medicare beneficiaries are responsible for paying after reaching the set deductible. Coinsurance is a percentage of the medical care bill, but a copayment (copay) is typically a flat fee.
Let’s look at an example of how coinsurance and copayments work.
Joe has hip replacement surgery, and the total bill for the procedure is $35,000. With his current plan, he has a copay of $125 per day for the first six days in the hospital. Following surgery, Joe stays in the hospital for three days and must pay $375 – Joe’s plan will cover the remainder of the hospital expenses.
Joe is going to need crutches through the healing process. Crutches fall under the category of durable medical equipment – a 20% coinsurance on Joe’s plan. As such, Joe is responsible for $18.75 of the $75 cost of crutches.
On the other hand, Mary’s plan only requires a copay. She visits her doctor and has a $20 copay regardless of the Medicare-approved doctor charges for the visit. If she were to require additional care, surgery, tests, etc., she would only pay a predetermined copay amount that will permanently be fixed.
Medicare Part A Deductible in 2024
In 2024, the Medicare Part A deductible is $1,632 in 2024, an increase of $32 from $1,600 in 2023. (source)
About 99% of Medicare beneficiaries do not pay a Part A premium because they have worked and paid Medicare taxes for at least 40 quarters, as determined by the Social Security Administration.
A “benefit period” starts when you enter a hospital facility or skilled nursing facility (SNF) and ends when you have not received inpatient hospital care or SNF care for sixty days in a row.
Hospital Stay Deductible & Coinsurance
The amount you pay in out-of-pocket expenses depends on the length of the hospital stay.
| Part A Deductible and Coinsurance Amounts for Calendar Years 2022 and 2023 by Type of Cost Sharing |
||
| 2023 | 2024 | |
| Inpatient hospital deductible | $1,600 | $1,632 |
| Daily coinsurance for 61st-90th Day | $400 | $408 |
| Daily coinsurance for lifetime reserve days | $800 | $816 |
| Skilled Nursing Facility coinsurance | $200 | $204.00 |
(source)
Original Medicare will cover up to 90 days of inpatient hospital care during each benefit period. Recipients also have an additional 60 days of coverage- these are called “lifetime reserve days.” These additional 60 days may only be used once.
Mental Health Inpatient Stay Deductible & Coinsurance
Medicare Part A covers mental health care services that require you to be admitted as an inpatient. Medicare Part A covers the hospital room, meals, nursing, and other related services and supplies.
The mental health inpatient stay costs follow the same benefit periods seen above for hospital stays.
Skilled Nursing Facility Stay Deductible & Coinsurance
Medicare Part A covers skilled nursing care provided in an SNF. Skilled care is specialist nursing and therapy care that professionals can only perform. Medicare Part A covers some costs when you need skilled nursing or skilled therapy to treat, manage, and observe your condition. As the beneficiary, you will pay:
- Days 1–20: $0 coinsurance per day
- Days 21–100: Up to $200 coinsurance per day
- Days 101 and beyond: All costs
(Source)
Medicare Part B Deductible in 2024
Medicare Part B covers two areas of services: Medically Necessary Services and Preventive Care Services.
In 2024, the Medicare Part B deductible is $240, an increase of $14 from 2023. (source) Once the deductible has been met, the recipient pays 20% coinsurance of the Medicare-approved amount for the following.
Home Health Services Deductible
Medicare Part A and B cover eligible home health services as long as you need part-time or intermittent skilled services and you’re “homebound.” The home health agency must inform you about the Medicare coverage and any additional expenses before you start receiving the services. They should provide you with an “Advance Beneficiary Notice” (ABN) before giving you any services or supplies not covered by Medicare.
Your costs in Original Medicare:
- $0 of home health care service costs.
- After you meet the Part B deductible, 20% of the Medicare-approved amount for durable medical equipment.
(source)
Medical & Other Services Deductible
Medicare Part B beneficiaries pay 20% of the approved amount for most doctor services, outpatient therapy, and durable medical equipment after the deductible is met.
Outpatient Mental Health Services Deductible
Medicare Part B covers outpatient mental health services through a clinic or therapist’s office.
Coverage includes an annual depression screening, counseling services, diagnostic assessments, therapy, and more.
- Nothing is paid for yearly depression screening.
- 20% of the Medicare-approved amount for visits to your health care provider for diagnosis or treatment.
- Services received in a hospital outpatient clinic, or department may incur additional copayment or coinsurance fees.
Outpatient Hospital Services Deductible
After you meet your Part B deductible, you are required to pay a copayment for any outpatient hospital care you receive. You may have to pay multiple copays, but each copay must be less than the Part A deductible. However, your total copay costs may exceed the Part A deductible amount.
Part B also covers any outpatient provider services that you receive while you are in the hospital. For such services, you typically owe a separate 20% coinsurance.
Medicare Part D Deductibles, Copayments & Coinsurance
The Medicare Part D deductible is the amount you must pay for prescription drugs before the plan starts to pay.
The deductible varies from plan to plan and, in 2024, cannot be greater than $545. (source) Some Medicare Part D plans have $0 deductibles, meaning beneficiaries are only responsible for copayment or coinsurance amounts.
After your deductible is met, your plan will help pay most of your prescription drug costs, and you will pay a copayment or coinsurance.
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