The 2020 Medicare Deductible: What You Should Know
Medicare coverage is essential for most seniors — but it’s not free, and it doesn’t cover every healthcare need. Whether you are currently enrolled in Medicare or planning to enroll soon, you must understand the coverage gaps in Original Medicare and the out-of-pocket costs you’ll face.
If you don’t know what Medicare does and doesn’t cover, or the full cost of the various Medicare deductibles in 2020, it could spell financial disaster. Keep reading to get the facts on your Medicare coverage, costs and your options to ensure access to the care you need — and your financial peace of mind.
While Medicare Parts A and B provide coverage for some healthcare services, you could still end up paying a significant out-of-pocket amount for services that aren’t covered.
What is the Medicare Deductible for 2020?
As an enrollee in Original Medicare (Parts A and B), you’re responsible for certain out-of-pocket costs, including deductibles. A deductible is the amount you must pay before your Medicare coverage “kicks in.”
The Medicare Part A Deductible
Part A is your hospital insurance. It covers:
- Inpatient hospital care
- Stays at skilled nursing facilities
- Hospice care
- Home health care
The Part A deductible for 2020 is $1,408 for each benefit period. A benefit period starts on the day you are admitted to a hospital or skilled nursing facility. It ends when you have not received inpatient care for 60 days.
Example: You are admitted to the hospital on January 15 and check out on January 21. You pay your deductible of $1,408, and your benefit period ends on March 21. If you are readmitted to the hospital on March 1, you won’t have to pay another deductible — you are still in your benefit period. But if you’re admitted on March 23, you’re in a new benefit period. Therefore, you owe a new deductible of $1,408. If you are admitted again later in the year, you will have to pay yet another deductible, since again, you’ll be in a new benefit period.
Medicare Part B Deductible and Coinsurance
Part B is your medical insurance. Medicare Part B covers your typical, day-to-day healthcare needs, including:
- Preventive services (like a flu shot or cancer screenings)
- Medically necessary services (doctor visits, ambulance services, medical equipment and more)
The 2020 Medicare Part B deductible is $198 per year. But your Part B costs don’t end just because you’ve met the deductible.
In addition to a Part B deductible, you must also pay coinsurance. Part B coinsurance is 20% of the Medicare-approved amount of the services you receive. The Medicare-approved amount is the amount a doctor has agreed to charge Medicare patients — it is often less than their usual or customary rate.
Example: A doctor typically charges $110 for an office visit. However, he has agreed to charge Medicare patients $85. Your coinsurance amount would be $17 (20% of $85).
What Is Not Covered by Original Medicare?
There are certain healthcare products and services that are excluded — never covered — by Medicare Parts A and B. If you need one of those services, you’ll have to pay for the full cost. Surprisingly, many of the services Medicare doesn’t cover are necessary for seniors to stay in good health. For example, Original Medicare doesn’t cover:
- Drugs you take at home (blood pressure medication, pain medication, etc.)
- Vision exams or glasses
- Most dental care (including dentures)
- Hearing exams or aids
- Elective procedures (like cosmetic surgery)
- Routine foot care (e.g., removal of corns or calluses)
- Care furnished outside the US (e.g., if you were injured on vacation)
- Care necessary as a result of war
- Investigational devices (those that are still in clinical trials and not yet FDA-approved)
- Anything that’s not medically necessary (as determined by Medicare)
- Custodial care (someone in your home providing assistance with feeding, bathing, dressing, etc.)
As you can see, there is a long list of items and services Medicare won’t pay for. And even if you pay for them out of pocket, those payments won’t go toward covering your Part A or Part B deductibles. Luckily, options are available for you to get extra coverage beyond what Original Medicare offers. But before you start comparing options for better Medicare coverage, you’ll want to make sure you’re eligible.
Medigap plans fill the gaps in your Original Medicare coverage.
Are You Eligible for Medicare?
Generally, you become eligible for Medicare when you turn 65 years old. But age isn’t the only requirement you must meet:
- You must be a US citizen or a permanent legal resident who has lived in the US for at least five years
- You or your spouse must have worked long enough to be eligible for Social Security benefits (about 10 years of full-time work), or you or your spouse is a government employee/retiree who has paid Medicare payroll taxes while working.
Many people assume Medicare only covers seniors. But Americans 65+ aren’t the only people eligible for Medicare. In certain circumstances, individuals under the age of 65 are eligible to enroll. You may be eligible to enroll early if you’ve been:
- Eligible for Social Security or Railroad Retirement Board disability benefits for 24 months
- Diagnosed with End stage renal disease. This is permanent kidney failure that requires a transplant or dialysis
- Diagnosed with Lou Gehrig’s disease
Once you’ve verified that you’re eligible for Original Medicare, the next step is to get to know your other options for Medicare coverage.
What are the Options to Cover Medicare Costs?
While Medicare Parts A and B provide coverage for some healthcare services, you could still end up paying a significant out-of-pocket amount for services that aren’t covered, plus premiums, deductibles, co-pays, coinsurance and medications.
To cut down on those high costs, many seniors choose to supplement their Original Medicare coverage. You have several options for doing that.
Medicare Part C: Medicare Advantage Plans
These plans work similarly to private health insurance, and are offered through private insurance companies that have contracted with Medicare. Medicare Advantage plans replace your Original Medicare coverage. All Medicare Advantage plans include Part A and Part B services, and most — but not all — Medicare Advantage plans include prescription drug coverage.
Similar to private health insurance, many different types of Medicare Advantage plans are available depending on your location.
Medicare Part D: Prescription Drug Coverage
These plans add prescription drug coverage to your Original Medicare coverage. Many different Medicare Part D plans are available — the specific plans and costs depend on your location. For all plans, you’ll be responsible for out-of-pocket payments, including a premium and deductible.
Before you decide on a Medicare Part D plan, gather a list of any medications you take and the dosage. You’ll need that information to ensure a plan covers the medications you need and you get more accurate cost information.
Medicare Supplement Plans
These plans — also called Medigap plans — fill the gaps in your Original Medicare coverage. Like Medicare Advantage, these plans are offered by private insurers, so the costs for each plan — like premiums and deductibles — will vary.
In 2020, you have eight Medigap plans to choose from, each with different costs and coverage. Coverage, however, is standardized in most states. This means Medigap Plan G coverage is the same whether you purchase from insurer A or insurer B. This makes it easy to compare premiums and deductibles between insurers.
Many plans will cover your Part A deductible, but none of them will cover your Part B deductible. Medicare wants you to cover the Part B deductible so you have “skin in the game” — the intention is to cut down on overuse of services and unnecessary services. Medigap plans may also cover extra services, like healthcare outside the US.
Easily Compare Your Medicare Coverage Options for 2020
Choosing to supplement your Original Medicare coverage with a Medicare Advantage or Medigap plan can be time consuming and complex. To quickly determine the basic coverage levels of each option, use the chart below.
|Your Coverage Option||Hospital/Inpatient Stays||Doctor Visits/Routine & Preventive Care||Prescription Drugs||Parts A and B Out-of-Pocket Costs||Services Excluded from Medicare|
|Original Medicare + Part D||YES||YES||YES||NO||NO|
|Original Medicare + Medigap||YES||YES||Depends on plan||YES||Depends on plan|
|Medicare Advantage||YES||YES||Depends on plans||YES||Depends on plan|
Concerned about paying out-of-pocket costs like Medicare deductibles and premiums? It may help to share your concerns with a knowledgeable insurance agent who can help you get the coverage you need at a cost you can afford.
When you’re ready to get matched to the right plan for you, find free, personalized quotes for every type of Medicare coverage. If your Medicare Advantage or Medigap plan does not offer prescription drug coverage, you can still purchase a Medicare Part D plan separately.