Copayments vs. Coinsurance: How do they affect Medicare costs?

October 4, 2021

Medicare offers competitive health care coverage at a low price (sometimes even $0 premiums), though it only covers about 80% of typical health care costs. The other 20% of Medicare costs is made up of copayments, coinsurance, and other out-of-pocket expenses (like prescription prices). It’s important to be informed of these potential out-of-pocket costs before you get a surprising bill in the mail.

Medicare costs: Copayments vs. Coinsurance

Before we go any further, let’s define the basics.

  • Copayment: Set fees you pay for certain services or medical supplies. Copayments tend to be low (usually $10-$40) and only apply to specific things (such as a doctor’s office visits).
  • Coinsurance: The share you have to pay after reaching your yearly deductible. Unlike a copayment, coinsurance is usually a percentage of the total costs incurred.

Medicare copayments

Does Medicare Part A cover copayments?

For the most part, yes. 

Medicare Part A includes hospital stays, skilled nursing home stays, and hospice care. Part A covers nearly all applicable copayments. If you’re in hospice, you may be responsible for a $5 copay for any prescription drugs you receive. You may also have to cover a minor copayment for respite care or short-term inpatient care related to a hospice stay.

Does Medicare Part B cover copayments?

Sometimes. 

Medicare Part B includes most doctor visits, durable medical equipment, and some home health care. Part B covers most copayments. However, if you get outpatient hospital services or mental health services, you will likely be required to pay a copayment.

How to avoid paying copayments

To help cover the out-of-pocket costs that come with Medicare, many people choose to purchase a Medicare Supplement (or Medigap) plan. These plans are designed to cover the “gaps” that aren’t included in standard Medicare coverage. By purchasing Medicare Supplement Insurance, you pay a consistent monthly premium rather than unexpected, unpredictable out-of-pocket expenses as they arise. 

If that sounds enticing, you’re not alone. Medicare Supplement Insurance is a very popular choice among Medicare beneficiaries. There are 10 Medigap plan types, all of which cover at least a percentage of your copayments. 

  • Plans that cover all Part A and B copayments: Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan M, and Plan N
  • Plans that cover 75% of Part A and B copayments: Plan L
  • Plans that cover 50% of Part A and B copayments: Plan K

Medicare Coinsurance

Does Medicare Part A cover coinsurance?

It depends on your length of your stay in the hospital. 

For hospital and mental health inpatient stays, you pay no coinsurance for the first 60 days. You’ll pay a fixed amount for days 61-90 (in 2021, it is $371 per day), and a different amount for days 91+ ($742 in 2021). These amounts change annually. (Note: Costs for long hospital stays get a little more complicated with “lifetime reserve days” – visit medicare.gov for more details.)

For skilled nursing facility stays, you pay no coinsurance for the first 20 days and a fixed amount for days 21-100 ($185.50 in 2021). Again, these numbers change annually. For day 101 and beyond, you’ll have to pay all costs incurred out-of-pocket.

Does Medicare Part B cover coinsurance?

Medicare Part B coinsurance is a little more straightforward. After you meet your yearly deductible ($203 in 2021), you’ll pay 20% coinsurance for most doctor visits, outpatient services, and durable medical equipment. There is no cost for some preventive services, so be sure to ask your doctor for confirmation.

Medicare Supplement Insurance and coinsurance

There are several Medicare Supplement Insurance Plans that alleviate your out-of-pocket expenses by covering some or all coinsurance costs.

  • Plans A and B cover: 
      • Part A coinsurance and hospital costs up to 365 days after you’ve used up your Medicare benefits 
      • Part A hospice care coinsurance 
      • Part B coinsurance
  • Plans C, D, F, G, M, and N cover: 
      • Part A coinsurance and hospital costs up to 365 days after you’ve used up your Medicare benefits 
      • Part A hospice care coinsurance
      • Part B coinsurance 
      • Skilled nursing facility care coinsurance
  • Plan K covers:
      • Part A coinsurance and hospital costs up to 365 days after you’ve used up your Medicare benefits 
      • 50% of Part A hospice care coinsurance 
      • 50% of Part B coinsurance 
      • Skilled nursing facility care coinsurance
  • Plan L covers:
    • Part A coinsurance and hospital costs up to 365 days after you’ve used up your Medicare benefits 
    • 75% of Part A hospice care coinsurance 
    • 75% of Part B coinsurance 
    • Skilled nursing facility care coinsurance 

Decreasing your out-of-pocket costs with Medicare Supplement Insurance

Medicare Supplement Insurance is a great option for those looking to decrease their unexpected (and expensive) out-of-pocket costs. However, if you’re not careful, you may end up paying more in premiums than you should. Your location, budget, and expected health care needs are just a few things you should consider when choosing the right plan for you. 

Medicare Supplement Insurance is not your only option to decrease your out-of-pocket costs. Medicare Advantage plans offer protection against surprise bills by combining your Part A, Part B, and other coverage into a single plan. You may be able to find a plan that covers prescription drugs, fitness costs, and more. But since these plans are provided by private insurance carriers, coverage varies greatly.

Finding the right Medicare plan

To ensure you’re getting the right amount of coverage for your specific situation, enlist the help of a SmartMatch licensed insurance agent. They have access to up-to-the-minute information from a variety of insurance carriers, and they can help you calculate your future costs and compare premiums side-by-side. 

They can also guide you through a variety of other Medicare options that may better suit your needs, like prescription drug plans, dental, vision, and hearing coverage, and more. Visit our comparison shopping tool, or call us at (888) 411-7647 get started.

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