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What is coinsurance?

Coinsurance refers to a percentage of the Medicare-approved cost of your health care services that you’re expected to pay after you’ve paid your plan deductibles.

For Medicare Part A (inpatient coverage), there’s no coinsurance until you’ve been hospitalized for more than 60 days in a benefit period. At that point, in 2019, you’d pay $341/day for days 61-90 if you remain in the hospital for that long. After that, you’d start to use your lifetime reserve days, paying $682/day for up to 60 days in your lifetime. [Note that although coinsurance is usually a percentage of the cost, it’s a flat dollar amount for Medicare Part A.]

For Medicare Part B (outpatient coverage), you pay 20 percent of the Medicare-approved cost, after you’ve paid your deductible ($185 in 2019).

For Medicare Part D (prescription coverage), it depends on your policy’s plan design. But a standard plan has a deductible (no more than $415 in 2019), and then you pay 25 percent of the cost of your drugs (this is your coinsurance) until you reach the donut hole. But there is no longer a donut hole for brand-name drugs, as you continue to pay no more than 25 percent of their cost even after you hit the lower donut hold threshold (the donut hole was scheduled to close in 2020, but it closed one year early for brand-name drugs, thanks to the Bipartisan Budget Act of 2018). There is still a donut hole in 2019 for generic drugs: While in the donut hole, you pay 37 percent coinsurance for generics. If you reach the upper edge of the donut hole, you’ll be in the catastrophic coverage range for the rest of the year. Coinsurance at this point won’t exceed 5 percent of the cost of your drugs.

If you have a Medigap plan, it will cover some or all of the coinsurance that you’d otherwise have to pay for Medicare Part A and B, although Medigap plans will not cover any of your out-of-pocket costs for outpatient medications unless you still have Plan H, I, or J that you purchased prior to 2006.

If you enroll in Medicare Advantage, your plan will wrap inpatient, outpatient, and in most cases, prescription coverage, into one plan. There will generally be a deductible and then coinsurance that you’ll have to pay until you reach the plan’s out-of-pocket limit for the year.

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