The 3 primary out-of-pocket costs to consider when you compare Medicare plans are; copays. coinsurance & deductibles. Medicare copays, coinsurance and deductibles all contribute to annual coverage costs for plan enrollees each year. These terms all describe the money beneficiaries pay towards health care services and prescription drugs when they have health insurance.
Copays
A copay is a fixed amount of money beneficiaries pay for a specific service. They generally apply to: primary care provider visits, specialist visits, prescription drug refills (depending on the tier of the drug), and hospital services. Copays let the beneficiary know what they pay for each provider’s visit up front. Copays apply to most prescription drug plans, Medicare Advantage plans and some Medicare Supplement plans. Please keep in mind, sometimes there are other costs associated with a visit to a provider’s office.
Coinsurance
When a beneficiary and their health plan share the cost of approved medical services, that is coinsurance. Coinsurance payment amounts are based on a percentage of the cost. Beneficiaries enrolled in Original Medicare, will have to pay 20% of the cost for most services after they meet the annual deductible. After the enrollee meets the deductible, Original Medicare covers 80% of all approved costs.
Usually members of Medicare Advantage plans pay co-pays for medical visits instead of coinsurance. Although in many cases, MA/MAPD plan enrollees pay 20% coinsurance for Part B drugs (in-network).
Up until 2025, stand alone PDP plan enrollees could end up paying 25% coinsurance for drugs if they fell into the donut hole (coverage gap). The coverage gap was removed for 2025, therefore stand alone PDP enrollees do not pay coinsurance.
Click here to learn about the Part D prescription payment program
Deductibles
Deductibles are the amount plan enrollees pay out of pocket for most health care services before their plan starts to cover medical costs. The deductible does not apply to preventative services. Medicare plans cover preventative services at not cost to enrollees.
Once the deductible is met, enrollees are still required to pay copays and/or coinsurance costs.
There are 2 different deductibles for Original Medicare Part A & Part B, however many Medicare supplement plans cover the Part A deductible. There only 2 plans that cover the Part B deductible (Plan F & Plan C) neither plan is available to anyone who turns 65 after 1/1/2020.
Most MA/MAPD plans have separate deductibles; one for medical costs and one prescriptions. That means enrollees must meet their medical deductible before the plan pays for covered services. It also means enrollees must pay the deductible for prescriptions before the plan covers the cost of the medication. MA/MAPD enrollees still pay copays and coinsurance after they meet the deductible.
Watch a quick YouTube video on the $2,000 drug cap
Copays, coinsurance, and deductibles
Copays, coinsurance & deductibles are all factors to consider when discussing Medicare options. All these things contribute to the total cost of each plan a beneficiary chooses.
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