The parts of Medicare are like building blocks. They can be put together in different ways to provide coverage based on your needs. Start by learning about each part, including what it covers and what the costs are. You can go further down this page to learn about the different types of costs you might have with Medicare in general.
How to Understand Medicare Plans
Learn about the basics of Medicare Parts A, B, C & D. What do the parts of Medicare cover? When do you need to enroll?
Medicare helps pay for many health care items and services, but you will pay a share of the cost, too. Your Medicare costs include:
- Premiums
- Deductibles
- Co-payments
- Co-insurance
You pay premiums outright. Deductibles, co-payments (co-pays) and co-insurance are ways that Medicare shares the cost of your care with you.
Premium
A premium is a fixed amount that you pay. You may pay a premium to Medicare, to a private insurance company or to both, depending on your coverage. Most premiums are charged monthly and can change from year to year.
Deductible
A deductible is a set amount that you pay out of pocket for covered services before your plan begins to pay.
Words with Peter: Deductible
Do you know what a “deductible” is? Deductibles can have a big impact on your health care budget. Find out more in this video.
Co-payment
A co-payment, or co-pay, is a fixed amount you pay at the time you receive a covered service. For example, you might pay $20 each time you go to the doctor or $12 when you fill a prescription.
Co-insurance
Co-insurance is when you and your plan split the cost of a covered service. For example, you might pay 20% of the allowed amount and your plan would pay 80%.
Words with Peter: Copay and Coinsurance
Do you know the difference between “co-pay” and “co-insurance”? Find out by watching this video.
Out-of-Pocket Maximum
The out-of-pocket maximum is the total amount you might pay during a calendar year. The total does not include your premium or the cost of any services that are not covered by your plan. After you reach your out-of-pocket maximum, your plan pays 100% of the allowed amount for covered services for the rest of the year. Only certain types of private Medicare plans have an out-of-pocket maximum.
Cost-sharing Considerations
It’s easy to focus on just 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.
But it’s a good idea to look at the big picture, too. For example, a plan with a low monthly premium might end up costing you more. You may have to pay a large deductible, or you might have high co-payments for doctor visits or prescriptions.
Think about how you will use your benefits and consider all the costs of Medicare. Also, you may be able to reduce your health care costs if you take steps to:
- Understand Medicare cost sharing
- Use health care services wisely
- Adopt healthy lifestyle behaviors