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March 31, 2016

Medicare Deductibles and Medicare Supplement Insurance

Medicare Deductibles and Medicare Supplement Insurance

An article by Dennis Jarvis

When you look at original Medicare, you’ll see references to deductibles and co-insurance all over the benefit summary and this also goes for Medicare supplement insurance plans so it’s probably a good idea to really understand what the term deductible means since it will directly affect money coming out of your pocket. So let’s break down the term deductible in layman’s terms (something sorely missing from all those shiny brochures you’re receiving in the mail).

First, what is a deductible? A deductible is an amount of money you must pay first before getting help from an insurance plan whether it’s Medicare or privately offered. Granted, it has a negative connotation because it’s money out of your pocket before receiving benefits. Let’s take a real basic example to help clarify it. You have a plan with a $1000 deductible for hospital coverage and you get surgery in a hospital that cost $3000. You will need to pay the first $1000 and then the carrier will start to pay for the remaining $2000 either in total or as a percentage (which is called co-insurance and will be covered in another article). Usually, deductibles are calendar year which means that they reset Jan 1st of each year although Medicare has some deductibles that are for a period of time (say 60 days). This means that the deductible will restart after 60 days of receiving medical benefits so you could potentially have more than 1 deductible in a calendar year if you have multiple instances of health care needs. Let’s look specifically at how Medicare treats deductibles. Medicare essentially has two deductible in its basic plan benefits (not looking at medication coverage through Part D). Since the amounts tend to rise over time, we won’t give exact amounts but use $100 for Part B (physician charges) and $1000 for Part A deductibles (hospital or facility charges) as a benchmark. You can always find out this year’s Part A and Part B deductible amounts at Traditional Medicare is split along these two categories – physician and hospital. The Part B deductible is pretty straight forward in that you will need to pay the first $100 (in our example) of physician or office charges first before the co-insurance of 80/20 kicks in per calendar year. The Part A deductible is a bit different. First, it’s much higher since we’re now talking about facility or hospital based medical care. It’s not uncommon for a simple surgery to run $20K these days. Although co-insurance, the amount you pay after the deductible, is really the more critical issue since it’s not capped, deductibles are the charges you feel first and so they are a primary hole in traditional Medicare that we need to address. Enter your trusty Medicare supplement insurance plan. Now each Medicare supplement is different in terms of what it covers but we like to lead with not only the most popular of the lettered plans but in our opinion, the best value…our trusty F Medicare supplement insurance plan. In terms of the deductibles inherent in traditional Medicare, you can’t’ get better when it comes to deductibles as the F plan will cover both deductibles at 100%. That’s right…you shouldn’t have any deductibles while on the F plan for either Part A or Part B eligible charges. This is a pretty smart move considering the fact that you’re very likely to actually hit these deductibles since they occur right away…first dollar expenses. Yes, the co-insurance gap is the more serious issue but the deductible is the more likely experienced hole in traditional Medicare. The F Medicare supplement insurance does a great job of addressing this upfront cost as well as the co-insurance which is a big factor in our support of that plan to cost effectively address Medicare deductibles.

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