How much does Medicare cost and how does cost sharing work?

Turning 65 and New to Medicare

Four words you need to know

Understanding how Medicare shares costs is a big part of choosing the right Medicare benefits. You’ll see four words over and over again on this site that have special meaning in Medicare. Mastering them will pay off.

  • Premium
  • Deductible
  • Copay
  • Coinsurance

These are names for different ways that Medicare shares the cost of your care with you. Medicare’s reasoning is simple: If you pay some of the cost of the health care you use, you will use it more carefully. And you’ll be encouraged to do things that help keep you healthy and that may reduce your need for medical care.

Medicare costs: You pay a share of your coverage.

1. Medicare Premium

Your premium is the fixed amount you pay to participate in Original Medicare (Medicare Parts A and B) or a Medicare plan offered by a private insurance company. Most Medicare premiums are charged monthly.

Cost sharing: You pay part of the amount and Medicare pays the rest

2. Medicare Deductible

Your deductible is the set amount you have to pay before your plan will pay the rest.

3. Medicare Copayment

Your copayment is the fixed amount you pay, like $10, for a service or product. Some people call this a “copay.”

4. Medicare Coinsurance

Coinsurance is splitting your health care costs with the plan on a percentage basis. For example, you pay 20%, and the plan pays the remaining 80%.

Important: It’s easy to focus only on your monthly premium when you compare plans. But you should also look at your other plan expenses like annual deductibles, copays and coinsurance.

For example, a plan with a lower monthly premium might cost you more over the course of the year because you have to pay a large deductible or you have a higher copay for your prescriptions.

Remember that the Medicare premiums, deductibles and copays shown in this guide are accurate for 2011, but may change from year to year.

– This information is provided by Medicare Made Clear

If you or someone in your family is 65 or older and is in need of a Medicare Supplemental Plan or already has a plan, but wants to make sure that it is the right plan please give us a call (888)891-5557 or go to our website and we will give you a quote and help you keep money in your pocket.

George C. Litchfield
CA Insurance License # 0B56846
Litchfield Insurance Agency