There are a number of different terms related to the way Medicare works, and one of the most important ones to know is coinsurance.
So, what is coinsurance, exactly? Coinsurance is the percentage of a medical bill that you (the Medicare beneficiary) may be responsible for paying after reaching your deductible.
The deductible is the amount you are required to pay in a given year or benefit period before Medicare begins paying its share.
Let’s use an example to explain it more clearly.
John has Original Medicare (Part A and Part B) and goes to the doctor for outpatient treatment.
John’s doctor appointment is covered by Medicare Part B, and his doctor bills Medicare for $300. Part B carries an annual deductible of $185 (in 2019), so John is responsible for the first $185 worth of Part B-covered services for the year.
After reaching his Part B deductible, the remaining $115 of his bill is covered in part by Medicare, though John will be required to pay a coinsurance cost.
Medicare Part B requires beneficiaries to pay a 20 percent coinsurance payment after reaching their deductible. This means that John will pay 20 percent of the remaining $115 of his bill, and Medicare Part B will cover 80 percent.
The total amount that John will have to pay for his appointment is $208, broken down as follows:
|Total medical bill||$300|
|2019 Part B deductible||$185|
|20 percent Part B coinsurance of remaining $115||$23|
|Total beneficiary will pay||$208|
Copayment, or copay, is another term you’ll see used in relation to Medicare cost-sharing. A copay is like coinsurance, except for one difference: While coinsurance typically involves a percentage of the total medical bill, a copayment is generally a flat fee.
For example, Part B of Medicare uses coinsurance, which is 20 percent in most cases. But Medicare Part A uses copayments for hospital stays, which begin at $341 per day for days 61-90 of an inpatient hospital stay in 2019. The primary difference between coinsurance vs. copays is that copayments are a flat fee amount instead of a percentage.
One way you can get some coverage for Medicare coinsurance is by purchasing Medicare Supplement Insurance.
Medicare Supplement Insurance plans (also called Medigap) are optional plans sold by private insurers that offer some coverage for certain out-of-pocket Medicare costs, such as coinsurance, copayments and deductibles.
In exchange for paying a monthly premium to belong to the plan, a Medigap plan can help cover the cost of your Medicare coinsurance and/or your deductibles.
If John from our above example had a Medigap plan that covered his Part B deductible and coinsurance, he may have owed nothing for his doctor’s appointment.
You can learn more about Medicare Supplement Insurance plans and find a plan that fits your needs by visiting MedicareSupplement.com.
Many Medicare beneficiaries choose to get their benefits through a privately-sold Medicare Advantage plan (Medicare Part C), which provides the benefits of Original Medicare combined into one plan.
While a Medicare Advantage plan will likely include coinsurance costs, a plan could help you save on some of your other out-of-pocket health care costs, which could help offset some of your coinsurance payments.
To learn more about Medicare Advantage and to compare the plan options available in your area, call to speak with a licensed insurance agent today.
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