Medicare is a federal health insurance program that covers millions of Americans who are 65 or older, disabled, or have certain chronic conditions. Medicare has four parts: Part A, Part B, Part C, and Part D. Each part covers different types of services and has different costs and benefits. In this article, we will focus on Medicare Part A, which covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services. We will explain what the Medicare Part A deductible is, how much it will be in 2024, and how it may change in 2025 due to the Inflation Reduction Act.
What is the Medicare Part A Deductible?
The Medicare Part A deductible is the amount that you have to pay out of pocket before Medicare starts to pay for your inpatient hospital services. The deductible applies to each benefit period, which begins when you are admitted to a hospital or a skilled nursing facility and ends when you have been out of the hospital or facility for 60 consecutive days. The deductible does not apply to hospice care or home health care services.
The Medicare Part A deductible covers your share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. If you stay longer than 60 days in a hospital or a skilled nursing facility, you will have to pay a daily coinsurance amount for each additional day. The coinsurance amount varies depending on the type of facility and the length of your stay. For example, in 2023, the coinsurance amount for days 61-90 in a hospital was $389 per day, and for days 91 and beyond (lifetime reserve days) was $778 per day. For days 21-100 in a skilled nursing facility, the coinsurance amount was $194.50 per day¹.
How Much is the Medicare Part A Deductible in 2024?
The Medicare Part A deductible is adjusted annually based on inflation and other factors. The Centers for Medicare & Medicaid Services (CMS) usually announces the new deductible amount in November or December of each year for the following year. For 2023, the Medicare Part A deductible was $1,600, an increase of $44 from $1,556 in 2022¹. For 2024, the CMS has not yet released the official deductible amount, but based on historical trends and projections, we can estimate that it will be around $1,650². This means that if you are admitted to a hospital or a skilled nursing facility in 2024, you will have to pay $1,650 before Medicare starts to cover your inpatient services.
How Will the Inflation Reduction Act Affect the Medicare Part A Premium or Deductible in 2025?
The Inflation Reduction Act of 2022 (IRA) is a landmark legislation that aims to curb inflation by possibly reducing the federal government budget deficit, lowering prescription drug prices, and investing into domestic energy production while promoting clean energy³. The IRA also includes some provisions that affect Medicare Parts A and B premiums and deductibles. According to the IRA, starting from 2025, the Medicare Part A deductible will be increased by an additional $25 per year until it reaches $2,000⁴. This means that by 2030, the Medicare Part A deductible will be $2,000 regardless of inflation or other factors. The IRA also freezes the income-related premium adjustments for Medicare Parts B and D until 2030⁴. This means that high-income beneficiaries will pay the same amount of premiums as they did in 2022.
The IRA claims that these changes will help reduce the federal deficit by $200 billion over 10 years and extend the solvency of the Medicare trust fund by three years⁴. However, some critics argue that these changes will shift more costs to beneficiaries and reduce their access to care⁵. They also point out that the IRA does not address the underlying causes of inflation or health care spending growth⁵.
What are Some Ways to Reduce Your Out-of-Pocket Costs for Medicare Coverage Part A?
If you are concerned about paying the Medicare Part A deductible or coinsurance amounts, there are some options that may help you lower your out-of-pocket costs. These include:
- Enrolling in a Medicare Supplement (Medigap) Plan: A Medigap Plan is a private insurance policy that helps pay for some of the costs that Original Medicare (Parts A and B) does not cover, such as deductibles, coinsurance, and copayments. There are 10 standardized Medigap Plans available in most states (A through N), each with different benefits and costs. Depending on the plan you choose, you may be able to get coverage for all or part of your Medicare Part A deductible and coinsurance amounts. However, Medigap Plans have monthly premiums that vary by plan, company, and location. You also have to pay the Medicare Part B deductible in addition to the Medigap premium. You can compare Medigap Plans and costs using the Medicare Plan Finder or by contacting your State Health Insurance Assistance Program (SHIP)⁷.
- Enrolling in a Medicare Advantage (Part C) plan: A Medicare Advantage Plan is an alternative way to get your Medicare benefits through a private insurance company that contracts with Medicare. Medicare Advantage Plans cover all the services that Original Medicare covers, and may also offer extra benefits such as vision, dental, hearing, wellness, and prescription drug coverage. Some Medicare Advantage Plans have low or zero monthly premiums, and may also have lower deductibles and coinsurance amounts than Original Medicare. However, Medicare Advantage Plans have networks of providers that you have to use to get the lowest costs, and may also have prior authorization or referral requirements for some services. You also have to pay the Medicare Part B premium in addition to the Medicare Advantage premium (if any). You can compare Medicare Advantage Plans and costs using the Medicare Plan Finder or by contacting your State Health Insurance Assistance Program (SHIP)⁷.
- Applying for Extra Help or other assistance programs: Extra Help is a federal program that helps low-income beneficiaries pay for their Medicare Part D prescription drug costs. If you qualify for Extra Help, you may get help with your Part D premiums, deductibles, copayments, and coinsurance amounts. You may also be automatically enrolled in a Part D Plan with low or zero monthly premiums. You can apply for Extra Help online at Social Security, by calling 1-800-772-1213, or by visiting your local Social Security office. There are also other assistance programs that may help you pay for your Medicare costs, such as Medicaid, Medicare Savings Programs, State Pharmaceutical Assistance Programs, and Programs of All-inclusive Care for the Elderly (PACE). You can find out if you are eligible for any of these programs by using the Benefits Check Up tool or by contacting your State Health Insurance Assistance Program (SHIP)⁷.
Conclusion
The Medicare Part A deductible is the amount that you have to pay out of pocket before Medicare starts to pay for your inpatient hospital services. The deductible applies to each benefit period, which begins when you are admitted to a hospital or a skilled nursing facility and ends when you have been out of the hospital or facility for 60 consecutive days. The deductible amount is adjusted annually based on inflation and other factors. For 2024, we estimate that the deductible will be around $1,650. For 2025 and beyond, the deductible will be increased by an additional $25 per year until it reaches $2,000 due to the Inflation Reduction Act of 2022. This legislation also freezes the income-related premium adjustments for Medicare Parts B and D until 2030.
If you are concerned about paying the Medicare Part A deductible or coinsurance amounts, you may consider enrolling in a Medigap Plan, a Medicare Advantage Plan, or applying for Extra Help or other assistance programs. These options may help you lower your out-of-pocket costs and get more benefits from your Medicare coverage. However, you should compare the benefits and costs of different plans and programs before making a decision. You can use the online tools and resources mentioned in this article or contact your State Health Insurance Assistance Program (SHIP) for more information and assistance.
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FAQS
What will be the average Medicare Part D premium in 2024?
The average total monthly Part D premium is projected to be about $55.50 in 2024, down from $66 in 2023, due to changes in Part D benefit parameters.
How will Medicare Part D coverage change in 2024?
Starting in 2024, Medicare will pay 20% of costs in the Part D coverage gap phase rather than 25%. Beneficiaries will pay 25% instead of 30%.
What is the Medicare Part D coverage gap?
The coverage gap, also called the donut hole, is a temporary limit on prescription drug coverage under Part D Plans after you and your plan spend a certain amount.
Who benefits from the improvements to Medicare Part D?
About 51 million Medicare beneficiaries will benefit from reduced Part D premiums and more coverage in the donut hole gap phase starting in 2024.
How are Medicare Part D premiums and costs determined?
Part D premiums and costs are based on total Part D spending, Medicare’s share of costs, plan bids, and base beneficiary premiums as set by law.
Will Medicare Advantage Plan costs decrease in 2024?
Yes, the average total monthly payment for MA plans is projected to decrease by about 5% beginning in 2024 compared to 2023.
What expenses do Part D prescription drug plans cover?
Medicare prescription drug or Part D Plans cover the cost of most prescription drugs if they are on the plan’s formulary or list of covered medications.
Who qualifies for extra help with Part D costs?
People with limited income and resources may qualify for Part D’s low-income subsidy to help pay premiums, deductibles, and copays.
Does Medicare Part B cover prescription drugs?
No, Part B does not provide general prescription drug coverage. You need to enroll in a separate Part D deductible for drug coverage.
When can I make changes to my Part D Plan?
People with Medicare can switch or make changes to Medicare Part D drug plan each year during open enrollment from October 15 to December 7 for coverage beginning January 1.
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