For many people trying to navigate Medicare, understanding how and when out-of-pocket costs apply can be overwhelming. The terminology “first dollar Medicare services” may cause confusion for some individuals. We will explain what it actually means and how they work in the context of Medicare services.
First Dollar Coverage
First dollar coverage refers to insurance benefits that begin immediately. The enrollee is not required to, pay a deductible, copay, or coinsurance before the carrier provides coverage for a medical service. This coverage literally begins from the “first dollar” of a medical bill providing the highest level of financial protection.
With Original Medicare (Parts A and B), this kind of coverage is not included by default, although it may be accessed through either supplemental plans or Medicare Advantage plans in some circumstances.
Original Medicare: No First Dollar Coverage
Medicare is divided into Part A (hospital insurance) and Part B (medical/outpatient insurance).
Original Medicare enrollees are responsible for the following out-of-pocket costs:
- Deductibles: Part A ($1,632 per benefit period in 2025); Part B ($240 annual)
- Coinsurance: 20% for most Part B services after the deductible
- Copays: Varies depending on the service or provider
Please note; although Medicare covers a significant portion of approved healthcare costs, it does not offer first dollar coverage when used on its own. Beneficiaries are responsible for cost-sharing amounts unless they purchase supplemental coverage.
First Dollar Coverage for Medicare Services
In general, there are two ways Medicare beneficiaries receive first dollar coverage:
1. Medicare Supplement (Medigap) Plans
The Medigap plans listed below cover most or all out-of-pocket costs after Original Medicare pays its share.
- Plan F: Offers true first dollar coverage. This plan covers both Part A and Part B deductibles as well as all coinsurance and copays for approved medical expenses as well as excess charges.
- Plan C: Similar to Plan F but doesn’t cover excess charges. Important: Plans F and C are not available to individuals who were eligible for Medicare after January 1, 2020.
- Plan G: Covers all approved Medicare expenses; except the Part B deductible, making this plan very close to first dollar coverage.
Beneficiaries enrolled in a Plan F shouldn’t have to pay anything out-of-pocket for Medicare covered services.
2. Some Medicare Advantage (Part C) Plans
Medicare Advantage plans are an alternative to Original Medicare. Some Medicare Advantage plans offer enrollees:
- $0 monthly premiums
- $0 copays for primary care, lab work, preventive services, or telehealth
- Reduced out-of-pocket costs through annual limits
Although technically they are not considered “first dollar” coverage, some plan benefits can effectively eliminate upfront costs for specific services, depending the plan design.
Keep in mind: Medicare Advantage plans may include networks, referrals, and prior authorization requirements.
Watch a quick YouTube video on Medicare enrollment periods
Examples of First Dollar Medicare Service
- Example 1: A Medigap Plan F enrollee visits the emergency room. The bill is fully covered; no deductible, no copay, no coinsurance. This is real first dollar coverage.
- Example 2: A Medicare Advantage plan enrollee has a $0 copay for a primary care visit. Although the plan may have a deductible for other services, this specific visit is a first dollar service.
- Example 3: A individual with Original Medicare and no supplemental coverage uses the services of a specialist. This individual must meet the Part B deductible and then pay 20% for all approved charges. In other words, this is not first dollar coverage.
Why First Dollar Coverage Matters
- Predictable healthcare costs
- Easier budgeting for individuals on fixed incomes
- Reduces the risk of surprise bills
- Encourages timely medical visits and screenings
Possible Downside
- Higher monthly premiums (especially with Medicare Supplement Plans)
- Less flexibility (if beneficiaries opt for a Medicare Advantage Plan) they must use specific provider networks.
- Limited plan availability for more recent enrollees (Medicare Supplement Plan F and Plan C enrollment restrictions).
First dollar Medicare services are about financial peace of mind. While Original Medicare doesn’t provide this level of coverage on its own, many beneficiaries learn that Medicare Supplements or Medicare Advantage plans reduce or eliminate the high price of medical care.
Beneficiaries who like predictable expenses and minimal out-of-pocket costs, may opt for a plan that offers first dollar coverage. As a licensed Medicare agent, it is important to understand your clients healthcare needs and budget to offer plan choices that provided the best benefit options.