Updated: Jul 20, 2021
It’s important to know what Medicare copays, coinsurance, and deductibles are in order to find out what you’ll be paying for and to make the right decision about which Medicare coverage is right for you. Copays, coinsurance, and deductibles are all part of Medicare
A copay, or copayment, is a predetermined, flat fee you pay for healthcare for services at the time you receive care. For example, when you visit the doctor, purchase prescription drugs, or visit the hospital, you may be asked to pay before you receive your healthcare.
This amount is different based on your Medicare plan and what type of service you receive. Generally, you will not have to pay a copay and coinsurance on a single service.
Unlike flat-fee copays, coinsurance is a percentage of the price of service you’ll pay. For example, after you have paid the Medicare Part B (medical insurance) deductible for the year ($203 in 2021), you will be required to pay 20 percent of each service covered by Part B, and Medicare pays the remaining 80 percent.
For Medicare Part A (hospital insurance), coinsurance is a set dollar amount that you pay for covered days spent in the hospital. Here are the Part A coinsurance amounts for 2021:
Days 1 – 60: $0
Days 61 – 90: $371
Days 90 – lifetime reserve days: $742 per day until you have used up your lifetime reserve days (you get 60 lifetime reserve days over the course of your life); after that, you pay the full cost.
Skilled nursing facility coinsurance: $185.50 for days 21 – 100 of each benefit period.
Some Medigap plans can help you cover an additional 365 days in the hospital.
A deductible is the amount you will pay before your benefits kick in. For
2021, the Medicare Part B deductible is $203. This amount will be paid only once per year.
The 2021 Part A deductible is $1,484 per benefit period. A benefit period in Part A begins on the first day you are admitted to the hospital and ends after you have spent 60 consecutive days out of the hospital.
Some Medicare Advantage and Part D prescription drug plans come with an annual deductible as well. Check with your individual plan to find out.
Maximum out-of-pocket limit
The maximum out-of-pocket limit (MOOP) is the dollar amount beyond which your plan will pay for 100 percent of your healthcare costs. Copays and coinsurance payments go toward this limit, but monthly premiums do not. The 2021 maximum out-of-pocket limits are:
Original Medicare – No out-of-pocket limit.
Medicare Advantage – No Medicare Advantage plan can have a maximum out-of-pocket limit higher than $7,550, but not all plans will charge the full $7,550 amount.
Medigap – Some Medigap plans pay the Part A deductible and coinsurance so that your out-of-pocket costs don’t get too high. Beginning January 1, 2020, no Medigap plan covers the Part B deductible unless you already had a Plan C or Plan F. People eligible for Medicare before 2020 may still be able to purchase a Medigap Plan C or Plan F.
For Part D prescription drug coverage, copay and coinsurance are separate from your Medicare plan. If your Part D plan has a deductible, you pay that first. After that, copays or coinsurance payments are what you pay for each prescription. Part D plans have different tiers as part of the Part D formulary, or lists of covered drugs in which different types of drugs incur lower or higher copays. These will differ according to your individual Part D plan.
Copays in Part D are when you pay a flat fee (for example, $10) for all drugs in a certain tier. Generic drugs usually have a lower copay amount than brand-name drugs.
Coinsurance in Part D means that you pay a percentage of the drug’s cost (for example, 25 percent).
Catastrophic coverage in Part D for 2021 is $6,550. Once you pay this amount out of pocket, you will pay only the copay on your prescription drugs, or 5 percent coinsurance, whichever is greater.
Make sure, if you have a plan (Medicare Advantage, Part D) that charges more for out-of-network providers, that you stay in your network of doctors if you need to save money. Read your benefits summary carefully to see how your plan handles copays, coinsurance, and deductibles so you won’t be in for any surprises. Under some Medicare Advantage plans, out-of-network expenses do not count toward the maximum out-of-pocket limit, so beware of costs that can add up.
Author: Monica Ross-Williams, MBA; LIA Monica’s vision for Insurance Management Consulting includes building long-term trust with our Clients’ to meet needs for not only today, but well into the future as life changes incur.
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