Counting Your Medicare Deductible Dollars In 2020

Key Takeaways:

• The 2020 Medicare Part A deductible you will pay if you are admitted into a hospital and for each benefit period is $1,408.

• The Medicare Part A inpatient hospital deductible covers your share of costs for the first 60 days of a Medicare-covered inpatient hospital stay in a benefit period. To cover the 61st through the 90th day of a hospital stay, you will have to pay coinsurance.

• The 2020 Medicare Part B deductible is $198 per year, and there is no benefit period that applies to Part B coverage.

• A Medicare Supplement insurance plan might be an option for you if you need help with Medicare coverage gaps, such as overseas travel coverage.

• If you want assistance with the costs of prescription drugs, you should consider enrolling in a Medicare Part D prescription drug plan. This is a stand-alone plan in which you can enroll when you are first eligible.

Three months before, during and after your 65th birthday, you can celebrate that you are now eligible for Medicare Parts A and B, also known as Original Medicare. Each year the Medicare premiums, deductibles and copayment rates are adjusted, so keeping up with the changes in cost is a good idea.

As part of what you paid into Medicare throughout your working years, you can receive Original Medicare at very little cost. The cost to purchase the same insurance on the open market would be much higher when you factor in what will likely be decades of coverage for you by Medicare.

Understanding Medicare Part A and Part B

Medicare Part A and Part B are basic plans of Medicare.

Medicare Part A covers inpatient hospital stays, skilled nursing facility stays, some home health care services and hospice care.

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment such as walkers or wheelchairs and certain other medical and health services not covered by Medicare Part A.

Medicare Parts A and B require that you pay a deductible. A deductible is the amount you must first pay out of your own pocket for health care before your Medicare insurance coverage kicks in. You will have to pay a deductible for each inpatient hospital benefit period. This means you may have to pay a deductible more than once in a single year.

A benefit period begins the day you're admitted to a hospital or skilled nursing facility. It ends when you haven't had to stay the night in one of them for 60 consecutive days. If you're admitted to a hospital or skilled nursing facility after one benefit period has ended, then a new benefit period begins and you'll have to pay another deductible.

Medicare Deductible Changes from 2019–2020

The 2020 Medicare Part A deductible you will pay if you are admitted into a hospital and for each benefit period is $1,408.

The Medicare Part A inpatient hospital deductible covers your share of costs for the first 60 days of a Medicare-covered inpatient hospital stay in a benefit period. To cover the 61st through the 90th day of a hospital stay, you will have to pay coinsurance. Coinsurance is the percentage of a medical bill you may be responsible for paying after reaching your deductible.

The coinsurance cost for a 61st through 90th day in a hospital is $352 per day. That's $11 more than in 2019. The coinsurance cost for a lifetime of care is $704 per day. That's $22 more than the cost in 2019.

If you have to utilize the services of a skilled nursing facility, the daily coinsurance for days one to 20 doesn't cost anything. Days 21 through 100 of extended care services in a benefit period is $176.00 — which is $5.50 more than in 2019.

Supplemental Coverage for Your Out-of-Pocket Expenses

To cover all or part of the cost of the Medicare Part A deductible, many Medicare recipients have supplemental coverage.

A Medicare Supplement insurance policy (also known as Medigap) helps pay some of the healthcare costs that Original Medicare doesn't cover, such as copayments, coinsurance and deductibles.

For a Medigap plan, you pay a monthly premium to the insurance company in addition to your Medicare Part B premium. The cost of your Medigap policy depends on the type of plan you buy, the insurance company, your location and your age.

A standardized Medigap policy is guaranteed renewable, even if you have health problems, as long as you pay your premiums on time. If you are going to buy a Medigap plan, the Medicare Open Enrollment Period is six months from the first day of the month of your 65th birthday — as long as you are also signed up for Medicare Part B or within six months of signing up for Medicare Part B.

The 2020 Medicare Part B deductible is $198 per year, and there is no benefit period that applies to Part B coverage.

There are costs that Medicare Parts A and B (Original Medicare) don't cover. This is called coverage gaps. One of the major gaps in coverage is prescription drugs that you take at home. The good news Medicare Part A usually covers medications you get for an inpatient hospital stay or skilled nursing facility setting.

Medicare Part B may offer some outpatient coverage for some prescriptions you get at a doctor's office, such as intravenous or chemotherapy drugs. However, you might have to pay all other prescription drug costs unless you have other insurance or you're enrolled in Medicare Part D, also known as prescription drug coverage.

What Original Medicare Doesn't Cover

Keep in mind that Original Medicare (Medicare Parts A & B) also doesn't generally cover costs such as:

• Routine vision care, such as eye exams, glasses or contacts (with some exceptions)

• Routine dental services, including oral exams, cleanings, dentures and fillings

• Routine foot care

• Routine hearing care, including hearing aids

• Nursing home care (if all you need is personal care, or help with daily living tasks)

• Health coverage if you're out of the country

Why You Should Consider Medicare Supplemental Insurance or Medicare Part D:

When it comes to avoiding some of Medicare's coverage gaps, you can choose from a few options:

Medicare Supplement — A Medicare Supplement insurance plan might be an option for you if you need help with Medicare coverage gaps, such as overseas travel coverage.

There are 10 standardized Medicare Supplement insurance plans. These plans are sold by private insurance companies and work alongside Original Medicare to cover copayments and deductibles. To take advantage of these plans, you must stay enrolled in Original Medicare.

Medicare Part D — If you want assistance with the costs of prescription drugs, you should consider enrolling in a Medicare Part D prescription drug plan. This is a standalone plan in which you can enroll when you are first eligible.

Medicare Eligibility

Just like Original Medicare, for most people, you first become eligible to enroll in Medicare Part D from three months before your 65th birthday to three months after your birthday. If you don't enroll at that time, you may owe a late enrollment penalty when you sign up.

Your 65th birthday is definitely a milestone and cause for celebration. Make that celebration count by getting the answers you need to all of your Medicare deductible questions and find Medicare Supplement plans that are right for you.

Sharrarne Morton taught English and journalism in higher education for 16 years and enjoys writing about finance and healthcare.