Do You Have to Pay Medicare Deductible Upfront?

Many people new to Medicare are unsure about how the deductible works – do you have to pay it upfront when you get care? Or does Medicare pay its share first? Understanding Medicare’s deductible policies can help you better budget for health expenses.

What is the Medicare Deductible?

The Medicare deductible is the amount you have to pay for healthcare services before Medicare begins providing coverage. There are separate deductibles for different parts of Medicare:

• Part A deductible – $1,600 in 2023 for each benefit period for inpatient hospital and skilled nursing facility care

• Part B deductible – $226 in 2023 for outpatient services like doctor visits and durable medical equipment

• Part D deductible – Varies by plan, typically $505 in 2023 for prescription drugs

These amounts get adjusted annually based on Medicare spending trends. You must pay the full deductible amounts before regular Medicare benefits kick in.

Do You Pay the Deductible Upfront?

Whether you have to pay the Medicare deductible upfront depends on:

• The specific part of Medicare involved
• Whether your healthcare provider accepts assignment
• The type of service you receive

Here’s how it works for Original Medicare Parts A, B, and D:

Part A Deductible

For inpatient hospital and skilled nursing facility care under Part A:

• You typically pay the $1,600 deductible per benefit period upfront before Medicare coverage begins

• The hospital or facility bills you for the deductible before discharge in most cases

So expect to pay your Part A deductible upfront if you have an inpatient hospital or skilled nursing stay.

Part B Deductible

For Part B medical services and supplies:

• If your provider accepts assignment – Medicare pays its share (80%) upfront, you pay 20% coinsurance plus any remaining deductible

• If provider doesn’t accept assignment – You may have to pay the full charge upfront and then get repaid the Medicare amount

So with Part B, whether you prepay the deductible depends on if your provider accepts assignment.

Part D Deductible

For Part D prescription drugs:

• You typically pay 100% of drug costs until you reach your plan’s deductible amount

• After reaching the deductible, you pay copays/coinsurance and Medicare helps cover costs

So expect to pay the full deductible amount upfront before Part D coverage activates.

Why Do You Have to Prepay the Deductible?

There are a few reasons why you often have to pay Medicare’s deductibles upfront before coverage begins:

Medicare is secondary payer – If you have other primary insurance like employer group coverage, it pays first before Medicare, up to the deductible.

Providers want payment security – Pre-collecting the deductible ensures providers will get paid for at least part of the service cost.

Deductible prompts more careful use – Requiring upfront payment makes patients evaluate need and shop for lower-cost providers.

Deductible avoids claim delays – Prepayment speeds payment to providers instead of waiting for Medicare claims processing.

So in many cases, prepaying the deductible is most efficient for processing Medicare claims quickly.

Are Any Medicare Services Covered Before the Deductible?

There are some health services that Medicare will help cover before you’ve paid your deductible:

• Preventive services – Medicare covers 100% of costs for eligible preventive care like cancer screenings and annual wellness visits before the Part B deductible is met. This removes barriers to preventive care access.

• Partial hospitalization – For psychiatric partial hospitalization programs under Part A, Medicare pays a percentage of the daily costs before the deductible is satisfied. This helps make mental health services more affordable upfront for those who need intensive outpatient care.

• Foreign travel emergencies – For emergency care outside the U.S. and its territories, Medicare may pay 80% of reasonable charges before the Part B deductible is met. This provides payment assistance for unexpected emergencies abroad.

So in limited cases, Medicare provides some coverage before you’ve hit your annual deductible amount. But for most non-preventive care, expect to pay the deductible first.

Tips to Help Cover Medicare Deductible Costs

Since you typically have to pay Medicare deductibles upfront before coverage kicks in, here are some tips to help you cover those costs:

• Use secondary insurance – If you have other insurance like a Medigap or retiree plan, it can help pay all or part of Medicare deductibles.

• Enroll in Part D early – Sign up when you’re first eligible to get the most out of benefits and avoid coverage gaps.

• Spend smartly – Check if you’re close to meeting your deductible and hold off on discretionary care until after you hit the threshold.

• Ask for charity care – If hospital bills are unaffordable, request help from financial assistance programs.

• Use payment plans – Many providers let you set up monthly installment plans for large out-of-pocket medical bills.

• Consider a Health Savings Account – An HSA lets you set aside pre-tax funds to cover Medicare copays, coinsurance, and deductibles tax-free.

Understanding when and how to pay Medicare deductibles enables you to properly budget and prepare for health care expenses. Planning ahead is key to handling these costs smoothly.

Frequently Asked Questions

Below are some common questions surrounding Medicare deductibles:

Do Advantage Plans have deductibles?

Yes, most Medicare Advantage plans charge deductibles, but they may be lower than Original Medicare. The maximum allowed is $1,000 combined medical/drug deductible. Many plans have no deductible.

What if I’m admitted at the end of a benefit period?

If you’re admitted in one benefit period but not discharged until the next benefit period starts, you pay the Part A deductible for both periods.

Can I pay my deductible in installments?

Unfortunately, Medicare does not allow paying the deductible in installments over time. It must be paid in full before benefits begin.

Do Medigap plans cover the Medicare deductible?

Many Medigap policies will cover some or all of your Medicare deductibles, depending on the specific plan you select.

What if I can’t afford to prepay my Medicare deductible?

If you are unable to prepay your Medicare deductible, request charity care or a payment plan from the hospital/provider. Or seek help through State Health Insurance Assistance Programs (SHIPs).

The Takeaway

You typically must pay Medicare’s deductibles in full upfront before coverage kicks in, except for certain preventive services. This allows providers to get paid promptly. Understanding the prepayment requirements enables you to properly budget for upcoming medical expenses.