Premiums, Copays and More…Oh My!Posted by Medicare Made Clear
October is Health Literacy Month, and Medicare Open Enrollment starts on October 15. What better time could there be to make sure you understand the terms Medicare uses to describe your Medicare costs?
Whether you get your Medicare benefits through Original Medicare or through a Medicare Advantage, you are likely to have some out-of-pocket costs. The key is to understand upfront what you will be charged for and how the amount you are charged is determined. With this information, you can start to estimate what you might pay out-of-pocket with different plans you might be considering during Medicare Open Enrollment.
Here is a brief explanation of the main ways that Medicare shares the cost of your care with you.
Premium – This is a fixed amount you may have to pay, usually monthly, to participate in a Medicare Advantage or other private Medicare health plan. If you are enrolled in Medicare Part B, you also pay a premium to Medicare. Part A is premium free for most people. Some Medicare Advantage plans do not have a premium.
Deductible – This is a fixed amount you must pay for your medical care before Medicare or other insurance pays. Deductibles apply during a calendar year, and the amount can vary among private Medicare plans of the same type. With Original Medicare, Part A and Part B each have a deductible. Some plans may not have a deductible.
- Copayment – Also known as a copay, this is a fixed amount you pay for a service or product at the time you get it. With a standalone Medicare prescription drug plan (Part D), for example, you might pay a $10 copayment each time you fill or refill a prescription.
Coinsurance – This is what you pay when the total cost of a service or product you receive is split with your plan. It is a percentage. For example, Medicare Part B might pay 80% of the cost for a visit to your doctor, and you would pay 20%.
Both Original Medicare private Medicare plans use these cost-sharing methods. But each plan has its own terms and conditions, so it’s important to read the plan material carefully.
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.
But it’s a good idea to look at the big picture, too. For example, a plan with a lower monthly premium might end up costing you more. You may have to meet a large deductible or you might have high copayments for your doctor visits or prescriptions. However, you might prefer this kind of plan if you don’t go to the doctor much or take many medications. So understanding how you will use your benefits is also an important part of making informed Medicare decisions.
For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. If you have questions about Medicare Made Clear, call 1-877-619-5582, TTY 711, 8 a.m. – 8 p.m. local time, seven days a week.
SSA.gov: Review the facts about social security eligibility, Medicare enrollment and benefits, and financial assistance to cover costs associated with Medicare.
Medicare.gov: Visit the official U.S. government site for Medicare.