How Do Copays, Coinsurance and Deductibles Work with Medicare Plans?

Copays, coinsurance and deductibles are all terms used to describe the money you pay towards health care services and prescription drugs when you have a health insurance plan. 


A copay is a fixed amount of money you pay for a certain service. Your health insurance plan pays the rest of the cost of the service.

Blue Cross Blue Shield of Michigan’s Medicare Advantage plans use copays for most services. With copays, you know exactly what you have to pay upfront for your care. 

For example, you may have a copay of $20 for a specific type of doctor's visit.  


Coinsurance is when you and your health care plan share the cost of paying for the services you receive. Coinsurance is based on a percentage. With Original Medicare, you pay 20% for most services once you've met your yearly deductible. Original Medicare pays the remaining 80%.

For example, if you were to have a $2,000 bill for services, you'd pay $400, and Medicare would pay $1,600.


A deductible is the amount of money you'll pay for health care services before your plan kicks in and starts paying for your medical costs. For most services, you’ll pay full cost until you reach the deductible. Your plan will cover some services, such as preventive care, before you reach your deductible. 

After you reach your Medicare plan's deductible, you’ll still have to pay any copays or coinsurance.

Original Medicare has a set deductible for Medicare Part A and Medicare Part B. After you pay your deductible, you're responsible for paying the coinsurance and required copays.

Most Medicare Advantage plans have separate medical and pharmacy deductibles. That means you need to meet your medical deductible before your plan will pay for covered services. You need to separately meet your prescription deductible before the cost of medication is covered by your Part D prescription drug plan.

If you have a Medicare Advantage plan, you don’t have to pay Original Medicare deductibles. 

Out-of-pocket maximum

An out-of-pocket maximum is the total amount of money you pay for services before your insurance company pays the rest of your covered medical costs. This amount includes your deductible, copays and coinsurance payments. 

Original Medicare has no out-of-pocket maximum. Medicare Advantage plans do have out-of-pocket maximums.

How copays, coinsurance, deductibles and out-of-pocket maximums work together

With a Medicare Advantage plan, we’ll track all the costs you pay – deductible, copays and coinsurance. After you pay your deductible, and reach the out-of-pocket maximum through copays and coinsurance, we pay for most covered services. This can help you better budget for your yearly Medicare costs. 

Original Medicare doesn’t have an out-of-pocket maximum. That means there’s no cap on what you pay out of pocket.

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