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Dec. 1, 2025

How does a Medicare deductible work?

Navigating the world of Medicare costs can feel daunting. Fortunately, there are strategies you can use to prepare for and reduce your planned out-of-pocket expenses

If you’re close to Medicare age or trying to learn about your coverage, you may be wondering how a Medicare deductible works. After all, a deductible is the amount of out-of-pocket costs you’re responsible for before your plan begins to cover its portion.

Medicare deductibles have a direct effect on your wallet, so it’s important to understand each plan. Keep reading to learn about Medicare plan deductibles and how to manage your health care costs.

What is a Medicare deductible?

Like many other health plans, Medicare plans have deductibles. A deductible is an out-of-pocket cost that you’re responsible for paying before your health plan kicks in.

What are the different types of Medicare deductibles?

Medicare deductibles are structured in several different ways. Each type of deductible has guidelines for how often you pay it in a plan year and how much is out-of-pocket.

Here’s a quick run-down of the different types:

  • Annual deductibles: These reset at the beginning of the plan year, typically on January 1. They apply to covered services throughout the year. Once you hit the deductible, your plan will begin to share the approved health care costs until the plan year ends.
  • Benefit period deductibles: This deductible resets each time you begin a new benefit period. You may pay this multiple times within a plan year, depending on how you’re using your Medicare plan.
  • Tier-specific deductibles: These deductibles apply to prescription drug plans, as is the case with Medicare Part D. The out-of-pocket cost depends on the tier a prescription drug falls under, according to Medicare rules.
  • Combined deductibles: Also known as integrated or basket deductibles, combined deductibles apply a singular deductible across multiple services and plans. Some types of Medicare Advantage plans offer combined deductibles. Once you hit this deductible, your plans may start covering a larger portion of your health care costs.

How deductibles vary among the different parts of Medicare

Every part of a Medicare plan has its own rules and deductible amounts. It’s important to understand how each part’s deductible works and how they interact with each other.

  • Part A (Hospital Insurance): Medicare Part A (Hospital Insurance) has a deductible that you’ll owe each time you’re admitted to the hospital. Remember that the deductible applies to every admission, unlike an annual deductible, where you only pay it once per plan year. If you’re hospitalized multiple times in a year, you may have to pay the deductible more than once. According to the Centers for Medicare and Medicaid Services (CMS), as of 2025, the deductible is $1,632 per benefit period1.
  • Part B (Medical Insurance): Medicare Part B (Medicare Medical Insurance) helps cover the costs of outpatient care, some preventive services and doctors’ services. It has an annual deductible of $240 as of 2025. Once you pay this amount out-of-pocket, your plan will cover 80% of approved costs, and you’ll owe 20% of the costs.2
  • Part C (Medicare Advantage): Medicare Part C plans are called Medicare Advantage plans. These plans are offered by private insurers. The deductibles and out-of-pocket amounts vary widely. Be sure to review your plan carefully so you can best understand the costs you may owe for using health care services.
  • Part D (Prescription Drug Coverage): Medicare Part D covers prescription drugs only. Deductibles apply on a tier-specific basis, and the deductible typically only applies to higher-tier prescription medications. The maximum standard deductible in 2025 is $5903. Review your plan carefully, as some Part D plans waive the deductible or only apply it to certain drug tiers.

Does Medigap Cover Medicare Deductibles?

Some Medicare beneficiaries choose to purchase Medicare Supplement Insurance (commonly called Medigap). Similar to Medicare Part C plans, Medigap plans are offered through private insurance companies. They help enrollees cover some of the out-of-pocket costs that Medicare doesn’t cover, which include deductibles, coinsurance and copayments.

Medigap plans can help cover the costs of Medicare deductibles. If you choose to explore this option, please do so carefully, as not every Medigap plan covers the full gamut of Medicare deductibles. For example. Medigap Plan G may cover all of the costs that Original Medicare does not, except for the Medicare Part B deductible. Or, Medigap Plan N may cover most expenses, but
you’ll owe small copays for certain health care services.

Depending on your situation, purchasing a Medigap policy can help you contain your out-of-pocket health care costs. Being a wise health care consumer begins with understanding your plan details and how they may affect your wallet.

What sort of expenses are covered with a deductible?

Every Medicare plan has its own rules on what types of health care services and offerings apply to the plan’s deductible. Generally speaking, Medicare deductibles typically apply to services that are considered to be medically necessary.

Examples of what sort of expenses a deductible may cover by Medicare Part include:

  • Part A: Medicare Part A deductibles generally apply to hospital stays, skilled nursing care services after a qualifying hospital stay, limited home health care services and hospice care. As a reminder, the Medicare Part A deductible is a benefit period deductible, meaning you may owe the amount more than once a year if you have multiple hospital stays outside of the benefit period (typically 60 days).
  • Part B: Medicare Part B deductibles generally apply to diagnostic tests, outpatient surgeries, doctor’s appointments, durable medical equipment, mental health services and preventive care services (e.g., vaccines, checkups, etc.).
  • Part D: Medicare Part D plan deductibles generally apply to covered prescription medications. The deductibles will vary based on plan formulary and prescription drug tier level. Covered prescription medications are usually subject to formulary and tier levels.

It’s always best practice to check with your health care provider or your provider’s billing specialists to help you understand whether a health care service is Medicare-approved and if it applies to your deductible. Doing your due diligence upfront can help you mitigate receiving surprise medical bills following planned services.

Examples of how Medicare deductibles work in real life

Sometimes, it’s easier to understand Medicare deductibles through a few real-life scenarios. Consider the following:

Example 1: You’re admitted to the hospital in March 2025 for a knee replacement. Because it’s a new benefit period, you’ll owe the $1,632 Part A deductible. You’re discharged after five days, and no further inpatient care is needed. That deductible covers your stay.

Example 2: You visit your primary care physician in January 2025. The cost of the visit is $200. Because you haven’t met your Part B deductible yet, you owe the full $200. Later that month, you get an outpatient diagnostic test that costs $300. At this point, you’ve met your $240 Part B deductible, so Medicare covers 80% of the next $60, and you owe the remaining 20%.

Example 3: You enroll in a Medicare Part D plan with a $500 deductible. In February, you fill a brand-name prescription that costs $480. You pay the full $480 because you haven’t met your deductible. Once you do, cost-sharing (coinsurance or copays) begins.

Tips for managing Medicare deductible costs

Navigating the world of Medicare costs can feel daunting. Fortunately, there are strategies you can use to prepare for and reduce your planned out-of-pocket expenses. Here are our top tips:

  • 1. Choose the right plan: Manage your health care costs by choosing your Medicare plan carefully. Review your options to find the one that is best for your health and budgetary needs.
  • 2. Use preventive care: Avoid costly health issues by accessing your fully covered preventive services, like checkups and screenings.
  • 3. Look into Extra Help and state assistance: Many states offer programs that help cover Medicare deductibles and other health care costs, especially if you have limited income.
  • 4. Plan ahead: Budget throughout the year for your deductible so you’re not caught off guard when medical expenses arise.

From annual costs to benefit-period resets, each part of Medicare has its own rules. Knowing these differences means you can choose plans wisely, manage your budget and avoid unexpected bills.

Whether you just became eligible for Medicare or are reviewing your current plan, it’s important to do your research to make the most of your Medicare benefits.

References

Medicare Articles