How Medicare Pays

A copay is your share of a medical bill after the insurance provider has contributed its financial portion. Medicare copays (also called copayments) most often come in the form of a flat fee and typically kick in after a deductible is met.

A deductible is an amount you must pay out of pocket before the benefits of the health insurance policy begin to pay.

The way Medicare pays is, you generally pay a set amount for your health care (deductible) before Medicare pays its share. Then, Medicare pays its share, and you pay your share (coinsurance/copayment) for covered services and supplies. There is no yearly limit for what you pay out-of-pocket. You usually pay a monthly premium for Part B. You generally don’t need to file Medicare claims. The law requires providers (like doctors, hospitals, skilled nursing facilities, and home health agencies) and suppliers to file your claims for the covered services and supplies you get.

Medicare pays for only a portion of your hospital and medical bills. As with many private insurance plans, the government expects beneficiaries to pay a share of their bills. Medicare Parts A and B both have deductibles and coinsurance. The deductibles for 2020 are $1,408 per Benefit Period, for Part A. 

A benefit period begins the day you are admitted as an inpatient in a hospital or skilled nursing facility (SNF). The benefit period ends when you have not received any inpatient hospital or SNF care for 60 days in a row. Therefore, it is possible to have multiple Part A hospital deductibles in the same year. In 2020 the Part B deductible is $198.00 per year, then you are responsible for 20%. 

Cover your Medicare out-of-pocket costs

There is one way that many Medicare enrollees get help covering their Medicare out-of-pocket costs.

There are two types of private insurance available to cover all or part of these out-of-pocket costs. These insurance plans are called Medicare Advantage (the Part C of Medicare) or Medicare Supplements (also called Medigap or Medsup Plans).

Medigap insurance plans are a form of private health insurance that helps supplement your Original Medicare coverage. You pay a premium to a private insurance company for enrollment in a Medigap plan, and the Medigap insurance helps pay for certain Medicare out-of-pocket costs including certain deductibles, copayments, and coinsurance.

Next, learn: Medicare Assignment