What a Medicare deductible is and when you pay it

A deductible is the amount of money you must pay out of your own pocket for healthcare services before Medicare starts to pay its share. Once you reach your deductible for the year, Medicare begins covering a portion of your costs — though you will still pay copayments or coinsurance for most services.

Each part of Medicare has its own deductible, and the amounts change every year. Part A (hospital insurance) has one deductible per benefit period. Part B (medical insurance) has one deductible per calendar year. Part D (prescription drug coverage) also has an annual deductible. Medigap and Medicare Advantage plans may have different deductibles than Original Medicare.

The deductible applies only to covered services. If you see a provider who does not accept Medicare, or if you receive a service Medicare does not cover, the deductible does not explore — but you will pay the full cost yourself.

Key Takeaways

  • Part A has a deductible per hospital stay (or benefit period), Part B has an annual deductible, and Part D has an annual deductible that resets each January.
  • You pay the full cost of covered services until you meet your deductible; after that, Medicare and you share the cost through copayments or coinsurance.
  • Deductible amounts change yearly and differ between Original Medicare, Medigap plans, and Medicare Advantage plans.
  • Once you meet your deductible, you still pay a share of most services — the deductible is not the same as having no out-of-pocket costs.

How Part A deductible works for hospital stays

Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health services. The Part A deductible applies per benefit period, not per calendar year. A benefit period begins the day you enter a hospital and ends 60 days after you leave without receiving any inpatient hospital or skilled nursing care.

If you are readmitted to the hospital within 60 days of leaving, you do not pay a new deductible — you are still in the same benefit period. If you are readmitted after 60 days have passed, a new benefit period begins and you owe a new deductible.

After you pay the Part A deductible, Medicare covers all covered hospital costs for days 1 through 60 of your stay. For days 61 through 90, you pay a daily coinsurance amount. Beyond 90 days, you pay a higher daily coinsurance, and Medicare covers the rest. If your stay exceeds 150 days, you pay all costs after day 150.

How Part B deductible works for doctor visits and outpatient care

Part B covers doctor visits, outpatient services, medical equipment, and preventive care. The Part B deductible is an annual amount that resets on January 1 each year. You must pay this deductible before Medicare begins to pay for Part B services.

Once you meet your Part B deductible, Medicare typically pays 80 percent of the approved amount for most services, and you pay 20 percent as coinsurance. Some preventive services (like screenings and vaccines) are covered at no cost after you meet your deductible. Others, like office visits for ongoing care, require you to pay coinsurance even after the deductible is met.

The deductible applies to the approved Medicare amount, not the full charge a provider may bill. If a provider charges more than Medicare approves, you may owe the difference in addition to your deductible and coinsurance.

How Part D deductible works for prescription drugs

Part D covers prescription medications through a private insurance plan you choose. The Part D deductible is an annual amount that resets on January 1. You pay the full cost of your prescriptions until you reach your deductible.

After you meet your deductible, you enter a phase where you and your plan share the cost of drugs through copayments or coinsurance. The amount you pay depends on which tier your drug is on — generic drugs usually cost less than brand-name drugs.

If your out-of-pocket costs reach a certain threshold during the year, you enter the catastrophic coverage phase, where Medicare pays most of the cost and you pay a small copayment per prescription. The exact amounts and thresholds vary by plan and year.

Deductibles in Medicare Advantage and Medigap plans

Medicare Advantage (Part C) plans are run by private insurance companies and must cover everything Original Medicare covers, but they may have different deductibles, copayments, and coinsurance. Some Medicare Advantage plans have no deductible, while others have a deductible similar to or higher than Original Medicare. You should compare the deductible amounts when choosing a plan during the annual enrollment period.

Medigap (supplemental insurance) plans help pay the costs that Original Medicare does not cover — such as deductibles, coinsurance, and copayments. Medigap plans themselves do not have deductibles in the traditional sense, but they do have different costs and coverage levels depending on which plan letter (A through N) you choose. Some Medigap plans cover your Part B deductible; others do not.

When your deductible resets and how to track it

Part A deductibles reset when a new benefit period begins — which happens 60 days after you leave the hospital. Part B and Part D deductibles reset on January 1 each year. If you have a Medicare Advantage plan, check your plan documents to see when deductibles reset, as some plans may follow a different schedule.

You can track your deductible progress by reviewing your Medicare statements. After you receive care, Medicare sends you an Explanation of Benefits (EOB) that shows what you paid, what Medicare paid, and how much of your deductible you have met. You can also log into your Medicare account at Medicare.gov to view your claims and deductible status.

If you see a provider who accepts Medicare assignment (meaning they accept Medicare's approved amount as full payment), your deductible and coinsurance will be calculated correctly. If a provider does not accept assignment, you may owe additional costs beyond your deductible.

Strategies to manage deductible costs

Scheduling preventive services early in the year can help you meet your Part B deductible faster, since some preventive care is covered at no cost. However, this strategy works only if you have other services that count toward the deductible.

If you have a Medigap plan that covers your Part B deductible, you will not pay it out of pocket — your Medigap plan pays it for you. This is one reason people choose Medigap coverage, though Medigap premiums are higher than Original Medicare alone.

For Part D, comparing plans during the annual enrollment period (October 15 to December 7) can help you find a plan with a lower deductible or one that covers your most-used medications at a lower cost. Some people with low incomes may receive help paying their Part D deductible through the Low-Income Subsidy program.

Frequently Asked Questions

Do I have to pay my deductible every year?

Yes. Part B and Part D deductibles reset on January 1 each year, so you will owe a new deductible each year. Part A deductible resets when a new benefit period begins, which happens 60 days after you leave the hospital. If you do not use hospital services, you may not owe a Part A deductible in a given year.

What happens if I do not meet my deductible by the end of the year?

If you do not meet your deductible by December 31, it does not carry over to the next year. Your deductible resets on January 1, and you start over. Any money you paid toward the previous year's deductible does not count toward the new year.

Can I use my Medigap plan to pay my deductible?

It depends on which Medigap plan you have. Some Medigap plans (such as Plan C and Plan F) cover your Part B deductible, while others do not. Check your Medigap plan documents or call your insurance company to see if your plan covers deductibles.

Does my Medicare Advantage plan deductible work the same way as Original Medicare?

Not necessarily. Medicare Advantage plans are run by private insurance companies and may have different deductible amounts, different benefit periods, or no deductible at all. Review your plan's summary of benefits to understand how your specific deductible works.

If I switch from Original Medicare to Medicare Advantage mid-year, do I owe a new deductible?

Yes. When you switch plans, your deductible resets under your new plan. Any deductible you paid toward your previous plan does not transfer. This is one reason to consider plan changes during the annual enrollment period rather than mid-year.