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Your Medicare Costs

Four words you need to know

Your Medicare costs include:

  • Premiums
  • Deductibles
  • Copayments
  • Coinsurance

You pay premiums outright. Deductibles, copayments (copays) and coinsurance are ways that Medicare shares the cost of your care with you.

You may be able to reduce your health care costs if you:

  • Understand Medicare cost sharing
  • Use health care services wisely
  • Have a healthy lifestyle
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A premium is a fixed fee that you pay for your Medicare coverage. You may pay a premium to Medicare, to a private insurance company or to both, depending on the coverage you choose. Most premiums are charged monthly.

Medicare premium graphic


A deductible is an amount that you pay out-of-pocket before your plan begins to pay some of your health care costs. Deductibles are charged annually by Part B and most private Medicare plans. Part A charges a deductible for each benefit period In Medicare Part A, a benefit period begins the day you go into a hospital or skilled nursing facility. It ends when you have been out for 60 days in a row. You may be in the hospital more than once during one benefit period. There is no limit on the number of benefit periods that Medicare will cover. Part A charges a deductible for each benefit period. .

Medicare deductible graphic


A copayment, or copay, is a fixed amount you pay each time you use a service or purchase a product. For example, you may pay $10 or $20 each time you go to the doctor or fill a prescription.

Medicare copayment graphic


Coinsurance is when you split the cost of a service or product. For example, you pay 20% of the Medicare-approved amount The amount Medicare determines to be reasonable for a covered service. Providers who “accept assignment” agree to accept this amount as payment in full. Providers who accept Medicare but not assignment can charge up to 15% above this amount. and Medicare pays 80%.

Medicare coinsurance graphic

Cost-sharing Considerations

It’s easy to focus only on monthly premiums when looking at Medicare costs. Premiums are regular monthly expenses that have to fit into a budget. And most of us are keenly aware of our monthly expenses.

It’s a good idea to look at the big picture. Think about how you will use your benefits and consider all the costs.

For example, a plan with a lower monthly premium might end up costing you more. You may have to pay a large deductible or you might have high copayments for your doctor visits or prescriptions. But this might not be important to you if you don’t go to the doctor much or take many medications.