How do copays, coinsurance and deductibles work with Medicare plans?
Who is this for?
If you're shopping for Medicare, this page will help you understand some common terms you might come across while you're researching.
Copays, coinsurance and deductibles are all terms to describe money you pay toward health care services and prescription drugs when you have a health insurance plan.
Copays and coinsurance
A copay is a fixed amount of money you pay for a certain service. Your health insurance plan pays the rest of the cost. Coinsurance refers to percentages.
Our Medicare Advantage plans use copays for most services. You pay 20 percent coinsurance for most services with Original Medicare.
Here's an example of how copays and coinsurance work with a Medicare Advantage plan.
A deductible is the amount of money you pay for health care services before your plan kicks in and starts paying. For most services, you'll pay full cost until you reach the deductible. After you reach your deductible, you’ll still have to pay any copays or coinsurance. Some services will be covered by your plan before you reach the deductible.
Here's an example of how a deductible works.
Most Medicare Advantage plans have separate medical and pharmacy deductibles. That means that in addition to the $175 medical deductible we used as an example above, you might also have a Part D prescription drug deductible that you’ll need to meet before your plan starts covering your medications.
Original Medicare has its own deductibles. In 2014, Medicare Part B has a $147 deductible each year. Medicare Part A has a $1,216 deductible each benefit period.
If you have a Medicare Advantage plan, you don’t have to pay Original Medicare deductibles. But your plan might have its own deductible.
How copays, coinsurance and deductible work together
With a Medicare Advantage plan, we’ll track all the costs you pay – deductible, copays and coinsurance. When you reach a certain amount, we pay for most covered services. This is called the out-of-pocket maximum.
Original Medicare doesn’t have an out-of-pocket maximum. There's no cap on what you pay out of pocket. And if you're in the hospital or a skilled nursing facility, Original Medicare only pays for a certain number of days. After that point, you pay the full amount each day.