Quick Guide to Coinsurance & Copays in Medicare

When you enroll in Medicare, it is important to understand what it will cost you. As we explain here, Medicare has a variety of ways members share costs, including monthly premiums and deductibles, some of which are linked to income level. There are additional costs that are charged when you actually use a service.

Coinsurance payments are shared by you and Medicare on a percentage basis. Medicare generally pays 80% for covered services and you pay 20% (unless you have a Medicare Supplemental insurance plan which helps fill in most of the gaps).

Copays are set fees you pay for doctor visits or prescription drugs when you use those services.

Medicare Supplemental insurance plans provide members with the option of paying a monthly premium to help fill in the gaps of what Medicare will not cover. Normally, Medicare covers 80% of “approved services” after you have met your deductible for Part A or Part B.

If you only have Original Medicare, without a Medicare Supplement insurance plan of any kind, you may be responsible for the remaining 20% of the approved charge. Medicare Advantage plans may have more affordable monthly premiums than a Medicare Supplemental insurance plan, but there are coinsurance and copays on services like hospital care, doctor visits, and lab tests.

Original Medicare does not have any limits on what you might pay annually out of pocket if the services you received were not covered or approved by Medicare. Medicare Advantage plans do have annual out-of-pocket limits (maximums) and Supplemental plans K and L also have out-of-pocket limits.

Since Medicare does not cover everything you might need, particularly if the treatment is considered experimental or investigational, you may want to consider enrolling in a plan that limits the maximum you might have to pay in any given year.

If you choose a Medicare Supplemental insurance plan, it is important to find out what coinsurance or copays you might need to pay in addition to what the Medicare Supplemental insurance plan covers.

The Medicare Part D prescription drug plans have monthly premiums, deductibles, and copayments. The private Medicare insurance plans that offer prescription drug coverage are not allowed to charge you more than $445 for the Part D deductible. Once you and your plan spend $4,130 combined on drugs (including the deductible), you’ll pay no more than 25% of the cost for prescription drugs until your out-of-pocket spending is $6,550, under the standard drug benefit in 2021.

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