Medicare Payments and Deductibles: What Medicare Parts Cover

Medicare Payments and Deductibles by Part

Medicare is divided into parts that cover different services, and each part handles its deductible differently. Part A covers inpatient hospital care, skilled nursing facility stays, hospice, and some home health services. Part B covers doctor visits, outpatient care, preventive services, and durable medical equipment. Understanding how the deductible works under each part is essential for estimating what you will actually pay out of pocket.

Medicare Part A Deductible

Part A has a deductible for each benefit period, not for each hospital stay. A benefit period begins the day you are admitted as an inpatient and ends when you have been out of the hospital for 60 consecutive days. The Part A deductible is a flat amount that applies at the start of each benefit period. For 2025, the standard Part A deductible is $1,676 per benefit period. Once you meet that deductible, Medicare pays 100% of covered inpatient costs for the first 60 days of the hospital stay. Days 61 through 90 require a daily copayment, and lifetime reserve days apply after day 90.

Medicare Part B Deductible

Part B has an annual deductible that you must meet before Medicare begins paying its share of covered services. Once the deductible is satisfied, Medicare typically pays 80% of the Medicare-approved amount for covered services, and you are responsible for the remaining 20% coinsurance. There is no limit on annual out-of-pocket costs under Part B unless you have supplemental coverage or a Medicare Advantage plan with an out-of-pocket maximum. The Part B deductible is a yearly amount, so it resets each January 1.

How the Deductible Works in Practice

The deductible applies before Medicare begins sharing costs. For Part A, that means the full deductible amount is due before the hospital day count for full coverage begins. For Part B, the deductible must be met before the 80/20 cost-sharing takes effect. Some preventive services are covered at 100% before the deductible is met, which is an important exception under Part B.

Medicare Advantage vs. Original Medicare Deductibles

Medicare Advantage plans, also known as Part C, are offered by private insurers and must cover at least what Original Medicare covers. However, they often structure costs differently. Many Medicare Advantage plans set a fixed annual out-of-pocket maximum, which can limit total spending in a year. Some plans have no separate deductible, while others may have deductibles for medical services and separate deductibles for prescription drug coverage. Comparing plan options during enrollment is important for understanding total cost exposure.

Medicare Supplement and Out-of-Pocket Costs

Medigap policies help cover the gaps in Original Medicare, including the Part A deductible, Part B deductible, and coinsurance. The specific benefits depend on the plan letter, such as Plan F, Plan G, or Plan N. Medigap does not work with Medicare Advantage plans, so it is only an option for those enrolled in Original Medicare. For people who want predictable costs, a Medigap policy can reduce the financial uncertainty that comes with Medicare cost-sharing.

Key Cost-Sharing Terms to Know

• Deductible: The amount you pay before Medicare begins covering services.
• Copayment: A fixed dollar amount you pay for a covered service, such as a daily hospital copayment under Part A.
• Coinsurance: The percentage of costs you share with Medicare, such as the 20% under Part B.
• Benefit Period: The timeframe used to track Part A coverage, starting on admission and ending after 60 days out of the hospital.

Stay Informed About Annual Changes

Medicare deductible and cost-sharing amounts can change each year based on statutory updates and program financing. Checking the current amounts during the Medicare Open Enrollment period helps avoid surprises. The official Medicare website and plan materials provide the most current figures for deductibles, copayments, and coinsurance.