What is the Medicare deductible for 2024?

A deductible is a fixed dollar amount you must pay out of pocket for care or services before your insurance starts to pay. It is not the same as a premium, which is what you must pay monthly in order to be enrolled in a health insurance program or plan.

Once you meet your deductible, the insurance fee schedule begins, and the insurance will pay its portion. Depending on your medical insurance, you and your insurance will share the cost of care or services.

Part A deductible

On average, the daily cost of a hospital stay is about $2,883 as of November 2023, according to debt.org. The average hospital stay is 4.6 days, which costs $13,262. 

Broadly speaking, Medicare Part A is the portion of Medicare that pays for inpatient hospital stays and some care received in skilled nursing facilities (SNF).

Unless you have supplemental coverage, you’ll be required to pay a deductible when admitted to the hospital. In 2024, the Medicare Part A deductible is $1,632 per benefit period. Once your deductible is met, Medicare will pay its portion for the benefit period. A benefit period for Part A begins the day you are admitted for inpatient care and ends the day you have been out of the hospital or SNF for 60 days in a row. A new benefit period starts if you are readmitted to the hospital after 60 or more days, which means you’ll have to pay a new deductible.

Once admitted to the hospital and after the deductible is met, you’ll pay:

• $0 for the first 60 days of each benefit period
• $408 per day for days 61-90 of each benefit period
• $816 per “lifetime reserve day” after day 90 of each benefit period (You have a maximum of 60 lifetime reserve days but can buy a Medigap policy for more.)

If you are sent to a skilled nursing facility after being admitted to the hospital, then you’ll pay:

• $0 for the first 20 days of each benefit period
• $204 per day for days 21-100 of each benefit period
• All costs for each day after day 100 of the benefit period

Note: All of the above costs may vary if you have a Medigaps, Medicare Savings Program, or another form of supplemental insurance. 

Part B deductible

Medicare Part B covers outpatient medical services, durable medical equipment, and office visits.

It has a lower annual deductible than Part A. The Part B deductible resets at the beginning of the calendar year. The Part B deductible for 2024 is $240. However, your part B costs may be higher if you have a higher income. 

Once you meet your Part B deductible, Medicare will begin to pay 80% of the Medicare-approved amounts for doctors and medical services. Once Medicare pays, you’re generally responsible for the remaining 20% and any excess charges.

Excess charges can be up to 15% more than the Medicare-approved amount if your healthcare provider does not accept Medicare assignment. Fortunately, these charges are easy to avoid by verifying your healthcare provider accepts Medicare assignments before scheduling an appointment. Only about 3% of healthcare providers nationwide actually apply these additional charges. Additionally, you can also purchase a Medigap policy that covers excess charges.

RELATED: How much does Medicare Part B cost?

Part C deductible

Medicare Part C is different from Original Medicare. Part C plans are called Medicare Advantage Plans.

These plans will combine your Medicare Part A and Medicare Part B benefits into a privately administered plan that combines both. Most of the time, these plans also include your Medicare prescription drug coverage.

Many Medicare Advantage plans don’t have a deductible for the hospital and medical services. Since private insurance companies operate these plans, they set the fee schedules, and the requirement is that they must be as good or better than the fee schedule of Original Medicare. Occasionally, you’ll see a plan with a deductible.

Medicare Part C drug coverage has to follow the same rule. Coverage is required to be as good or better than the Medicare Standard Model set forth by the Centers for Medicare & Medicaid Services (CMS). This means they can choose to have a separate prescription drug deductible, but it can’t be higher than the deductible set by the standard model. In 2024, that number is $545.

Because Medicare Advantage is an alternative way to receive your Medicare benefits, you’re not subject to the 20% coinsurance left over by Medicare but instead subject to the plan’s fee schedule.

Part D deductible

Medicare Part D is the stand-alone drug coverage you add to your Original Medicare to cover your prescription drugs from the pharmacy. These plans typically have an additional premium and are run by private insurance companies.

Like Medicare Advantage plans, Part D plans must follow the Medicare Part D standard model from CMS, which means they can charge a deductible of no more than $545 for 2024. These plans are subject to the four coverage phases set forth by the CMS Standard Model.

The four coverage phases consist of:

• Phase 1: Deductible phase
  • When you’re in the deductible phase, you’re responsible for the total retail cost of your prescription drugs until you’ve paid the Medicare Part D plan’s deductible.
  • Once your plan’s deductible has been met, you’ll move to the initial coverage phase. In this phase, you start paying fixed costs for your prescriptions. Some plans will have a $0 deductible, and others could have a max of $545 for 2024.
• Phase 2: Initial coverage phase
  • Once your plan’s annual deductible is met, it starts to pay its cost-share of the prescriptions. You’re then responsible for the copayments or coinsurance.
  • How long you stay in the initial coverage phase will depend on the costs of your drugs. You’ll remain in the initial coverage phase until the costs of your prescriptions reach $5,030.
• Phase 3: Coverage gap phase, aka the donut hole
  • Once you begin the coverage gap phase or donut hole, you’ll notice that most generic and brand-name drugs receive a 75% discount. This discount is given by a combination of the drug manufacturer and the federal government.
  • You’ll be responsible for the remaining 25% of the cost. You’ll remain in the coverage gap until you’ve paid the Medicare Part D True Out-of-Pocket (TrOOP) limit. The TrOOP is $8,000 in 2024.
• Phase 4: Catastrophic coverage phase
  • Once your Medicare Part D TrOOP limit has been met, your Part D Plan covers your drug costs. You will have no cost-sharing during the catastrophic coverage phase. 

A TrOOP consists of most amounts paid out of pocket, including copayments, deductibles, and coinsurance amounts. The coverage gap also consists of the discounts from brand-name drugs.

Not all Part D plans will include a deductible. Since they can provide coverage that’s better than the standard model, some Part D Plans will forgo the need for the deductible. Check your plan’s summary of benefits to see if you have a deductible on your plan.

How to save money on Medicare-related costs

Prescription drug costs are among the most concerning items that Medicare enrollees must consider in retirement. These costs can be small, and other times can be excessive. Several programs are available to help Medicare beneficiaries with the costs associated with prescription drugs.

The most common program that helps with prescription plans is called Extra Help, also known as Part D Low-income Subsidy (LIS). Extra Help is available for low-income Medicare beneficiaries. This program can help with prescription drug plan premiums, deductibles, copays, and coinsurance.

There are several levels of Extra Help to help those in need of financial assistance. In many cases, beneficiaries who qualify for these programs can also qualify for Medicare Savings Programs (MSP). 

These MSP programs can help low-income beneficiaries by paying for their monthly premiums and some or all of their Medicare cost-sharing.

Suppose you don’t fall into the category of low-income. In that case, you can consider a Medicare Supplement plan to lower your out-of-pocket costs for your Medicare-covered items and services. 

Medicare Supplement or Medigap plans could offset all or most of your cost-sharing with Original Medicare.

Another way to lower prescription drug costs is to choose a discount prescription card program. Using a free SingleCare discount card may get you a lower price if used instead of Medicare Part D coverage.