What is Co-insurance?Posted by Medicare Made Clear
Most of us are used to paying some of the cost for our health care. It’s no different with Medicare.
Your out-of-pocket Medicare costs could include premiums, deductibles, co-pays and co-insurance. Most of this sounds familiar, but co-insurance may be a type of cost you haven’t run into before.
Co-insurance is when you and your plan share the cost of a service you receive on a percentage basis. For most services covered by Part B, for example, you pay 20% and Medicare pays 80%. (You pay 100% of the cost until your Part B deductible is met.)
How Co-insurance Works
Let’s look at an example: Joe visits his doctor for chest pain. The doctor orders tests to help determine what the problem might be.
Joe has Original Medicare Parts A and B, and he has already met his Part B deductible for the year. Joe’s doctor “accepts assignment,” meaning that she agrees to take the Medicare-approved amount—what Medicare says is appropriate—as full payment for her services. Typically this amount is less than a doctor’s usual and customary fee. The table shows how the costs might break down.
Usual and customary doctor fees $300
Medicare-approved amount $220
Medicare pays 80% $176
Joe pays 20% (co-insurance) $44
Total Joe pays $44
In this example, the Medicare-approved amount is $220. Medicare pays $176 of that amount, and Joe pays $44. If Joe has a Medicare supplement insurance plan, his share of the cost might be covered by the plan.
With a Medicare Advantage (Part C) plan, you may pay co-pays or co-insurance for services you use. Medicare Advantage is an alternative to Original Medicare (Parts A and B); it’s another way to get your Medicare benefits. Plans are offered by private insurance companies approved by Medicare, and they are required to set an out-of-pocket limit for plan members. There’s no out-of-pocket limit with Original Medicare.
It’s your money, and it’s important to understand your Medicare costs and how they are calculated. Look over any medical bills you receive and the Medicare Summary Notices you get from Medicare. Talk to your provider or call Medicare if you have questions.
For more information, explore MedicareMadeClear.com or 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.