Medicare has different out-of-pocket costs, including premiums, deductibles, copayments, and coinsurance. Copayments are fixed dollar amounts, and coinsurance is a percentage of the cost.
You may notice that there’s a lot of terminology to learn with any health insurance plan, including Medicare.
Knowing what each term means and how it applies to your plan’s various benefits can help you manage costs more effectively.
When a particular benefit has a dollar amount that you must pay out of pocket, this is known as a copayment.
You must pay any applicable deductible before the copayment applies.
Copayment example
Your plan has a $50 copayment for doctors’ visits.
You visit a doctor who bills for $300.
You must pay the $50.
The plan pays the remaining $250.
You must pay a percentage of the cost when a benefit has a coinsurance.
Again, you must pay the plan deductible before the coinsurance applies.
Coinsurance example
Your plan has a coinsurance of 50%.
You visit your doctor, who bills for $300.
You must pay $150, which is 50% of $300.
Your plan covers the remaining $150.
If you have Original Medicare, there are some copayments to know.
The copayments take effect once you pay the Part A deductible, which in 2025 is $1,676.
The Part A deductible applies to each benefit period from the day you receive inpatient hospital care until you don’t receive inpatient hospital care for 60 consecutive days.
Original Medicare comprises Part A, which covers inpatient hospital care, and Part B, which covers outpatient medical services and limited medications.
Part A has copayments, including:
- Days 61 to 90 of an inpatient hospital stay: $419
- Days 91 to 150 of an inpatient hospital stay: $838 (while using lifetime reserve days)
- Days 21 to 100 of a stay in a skilled nursing facility: $209.50
- $5 for each eligible prescription drug while in hospice and other similar products for pain and symptom management while you’re at home
Part B doesn’t have specific copayments, although you must typically pay a copayment for each service you receive in a hospital outpatient department, like an emergency room.
Not many Original Medicare Part A services have a coinsurance, but many Part B services do.
A 20% coinsurance applies to:
- most inpatient doctors’ costs
- durable medical equipment (DME), such as wheelchairs, walkers, hospital beds, and other equipment that you need at home
- general costs for outpatient services, including mental health services
- partial hospitalization for mental health services that you receive from a doctor or another mental health professional
There’s also a 5% coinsurance for inpatient respite care at a hospice.
Medicare Advantage plans include all of the benefits of Original Medicare but usually include take-home prescription drug coverage and additional benefits like vision, dental, and fitness.
Part D prescription drug plans are stand-alone plans that work alongside Original Medicare and cover take-home medications that Part B doesn’t cover.
Private insurers provide Medicare Advantage and Part D plans, so out-of-pocket costs like copayments and coinsurance can vary by plan and insurer.
Part D prescription drug plan coinsurance
There are different stages to drug coverage.
The first stage is the deductible stage, where you must pay the plan deductible before the plan covers eligible expenses. In 2025, Part D deductibles can’t be above $590.
The second stage is the initial coverage stage. This stage means you must pay a 25% coinsurance for all eligible prescription medications.
The third stage is the catastrophic stage. After you pay out-of-pocket costs totaling $2,000, you may pay nothing more for your prescriptions for the rest of the calendar year.
Health plans, including Medicare, can have many out-of-pocket expenses.
A copayment is a fixed dollar amount you must pay toward eligible expenses, whereas a coinsurance is a percentage of a specific cost.
Different coinsurance and copayments apply to the different parts of Medicare, with some having an out-of-pocket maximum. However, some may apply for your coverage’s duration.