Sometimes when you\’re going into new territory like California Medicare supplement insurance, it\’s important to take a step back and start with the basics. That\’s a good introduction to tackle the term deductible and find out how and where it applies with Medicare and California Medigap comparisons. The deductible is one of those key terms in insurance that we need to really wrap our heads around in order to make a good decision. With that aim, let\’s jump right in.

First, what is a deductible in general and why does it have a bad reputation? A deductible is amount of money that you must pay first for certain benefits before getting help from the insurance carrier. On the surface, you would think that the lowest (or better yet, no deductible) is the way to go but there\’s a trade off in the premium you will pay to have the policy. Deductibles are usually calendar year (Jan-Dec) and this is true for California Medicare. California Medigap is a little different but before we can address how the various plans deal with Deductibles, we need to first look at traditional Medicare and find out where deductibles exist.

Traditional Medicare for Californian\’s has two main deductibles built in. First, there\’s a Part A deductible which is an initial amount of money you must pay for hospital and facility based care before paying 20% of the charges. These benefits assume that you do not have a California Medigap plan. This deductible is indexed to up with inflation and for 2012, it\’s currently $1156 for the calendar year. If you do not have a Medigap plan and only have traditional Medicare, you will pay this full $1156 first before an 80/20 cost sharing begins. The second deductible (Part B) is for physician benefits. This deductible is also calendar year and runs $140 in 2012. This deductible would not apply to benefits covered under the Preventative heading of Medicare for Californians. So those are the two common deductibles in traditional Medicare. How are these affected by California Medigap plans?

The coverage of Part A and Part B deductibles are one of the differences between the various California Medigap plans out there. The B, C, D, E, F, G, and N California Medicare supplement plan will cover the Part A deductible in full. The A plan does not cover it all and the K, L, and M plans will cover a percentage of it (50 or 75% depending on the plan). As for the Part B deductible (physician costs), the C and F plans are the only plans that cover it. Even the plans that have cost sharing (K, L, M, N) do not cover the Part B deductible. The F California Medigap plan is the most popular plan by far and it covers both the deductibles.

There\’s one more place that deductibles come into place and that\’s with Part D prescription benefits. Many plans on the market have a deductible for RX coverage before you start to pay either copays or coinsurance (percentages). Many carriers offer multiple Part D California plans and the lower priced plan generally has the deductible as a way to reduce the monthly premium for shoppers that are more price sensitive or who do not have existing medication needs. These are three most common places to find deductibles when dealing with Medicare and the F plan covers the Part A and Part B deductibles in full.

Dennis Jarvis is a licensed insurance agent concentrating on California Medicare supplement insurance.