Cost-sharing is a very common, easy-to-understand practice for many Medicare plans. It is also an extremely important concept to understand for all Medicare beneficiaries as they receive coverage.

Cost-Sharing Definition

As you may be able to tell by the term, cost-sharing is when Medicare only covers their “share” of the costs of a certain benefit, typically a majority or somewhere around 20%.

Let’s say, for example, you are told by your doctor that you need a home hospital bed. You choose a covered bed that costs $2,000. Your Medicare plan will pay for their “share” of those costs at 80%, meaning they will pay $1,600. You are responsible for the remaining 20% copayment, i.e., $400, from your own pocket apart from any other payments to the plan.

Cost-Sharing with Original Medicare

This example falls under Part B, which itself is a plan under Original Medicare, including Part A. A hospital bed would fall under the category “durable medical equipment” (DME) of coverage. For benefits under Part B, like the example shows, you must have a licensed medical professional recommend your for that benefit before Medicare covers their share.

Part A cost-sharing looks a bit different than Part B. Rather than an upfront cost-sharing fee for every benefit you receive under Part A, you will only have to pay a share when you stay in a healthcare facility for an extended amount of time.

Also, remember that for Original Medicare and every other Medicare plan, you will have to keep up with your premiums and meet your deductible before receiving any coverage.

With Medicare Advantage (Part C)

Part C provides all of the coverage of Original Medicare within a network of healthcare providers to reduce your overall costs. There are different types of plans to choose from and providers who offer them at different price points. Determining the exact amount you will pay in cost-sharing fees, then, is impossible without knowing your plan.

More often than not, however, cost-sharing fees for Part C are low. Typically, for in-network doctors, you will pay a copayment of somewhere between $10-$20.

With Part D

Your share of costs under Part D depends on the type of drug you need. They are organized into categories, or “tiers,” depending on how much you’ll pay out-of-pocket for it. There are four tiers, each with a higher copayment than the last, from $1-$3 up to 30%-40% of the total price.

With Supplements (Medigap)

Supplement copayments look a lot different than the other Parts of Medicare. Instead of you paying for your share of the cost, your supplement will pay for your share of the costs. Certain benefits under these plans still have cost-sharing, but just keep this in mind.

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