What Medicare Cost Sharing Means
Cost sharing is the amount you pay out of your own pocket when you use healthcare — the part Medicare does not cover. It comes in three forms: premiums (what you pay monthly to have coverage), deductibles (what you pay before Medicare starts paying), and copayments or coinsurance (what you pay each time you see a doctor or fill a prescription). The amount you pay depends on which Medicare plan you have and which service you are using.
Medicare Part A (hospital insurance) and Part B (medical insurance) both have cost sharing built in. Part D (prescription drug coverage) adds another layer. Understanding what you will owe helps you budget for healthcare and choose the right plan during open enrollment.
Key Takeaways
- Medicare Part A has a deductible per hospital stay, and Part B has an annual deductible plus 20% coinsurance for most services.
- Copayments for doctor visits and other services are fixed amounts you pay at the time of care, while coinsurance is a percentage of the total cost.
- Part D prescription drug plans have their own deductibles, copayments, and a coverage gap called the "donut hole" where you pay more out of pocket.
- Medigap (supplemental insurance) and Medicare Advantage plans change how much cost sharing you owe by covering some or all of what Original Medicare leaves unpaid.
- Your actual costs depend on the specific plan you choose and which doctors and pharmacies you use.
Part A Cost Sharing: Hospital and Skilled Nursing
Part A covers inpatient hospital stays, skilled nursing facility care, and hospice. You pay a deductible for each benefit period — a set dollar amount before Medicare starts paying. In 2024, that deductible is $1,676 per hospital stay. If you are readmitted within 60 days, you do not pay a second deductible; if you stay longer than 60 days in the hospital, you pay coinsurance (a daily amount) for days 61 through 90.
For skilled nursing facility care, you pay nothing for the first 20 days if you were hospitalized first. Days 21 through 100 require coinsurance — in 2024, $209.50 per day. After 100 days, you pay the full cost yourself. Hospice has no deductible or copayment, though you may pay a small copay for drugs and respite care.
Part B Cost Sharing: Doctor Visits and Outpatient Care
Part B covers doctor visits, outpatient surgery, diagnostic tests, and durable medical equipment. You pay an annual deductible (in 2024, $240) before Medicare pays anything. After you meet the deductible, Medicare pays 80% of the approved amount for most services, and you pay the remaining 20% as coinsurance.
Some services have a fixed copayment instead — for example, a set amount for a doctor visit or lab test. The copayment is the same whether the service costs $100 or $500. Preventive services like annual wellness visits, cancer screenings, and vaccinations have no cost sharing once you have met your Part B deductible.
If your doctor does not accept Medicare assignment (meaning they do not agree to charge only what Medicare allows), you may owe more than the standard 20% coinsurance. This is called balance billing, and it can add significantly to your costs.
Part D Cost Sharing: Prescription Drugs
Part D plans have their own deductible, copayments, and coinsurance structure. Most plans have an annual deductible you must meet before the plan starts paying for drugs. After that, you typically pay a copayment for each prescription — often $5 to $15 for generic drugs and $15 to $50 for brand-name drugs, depending on the plan.
Once you and your plan have spent a combined total of $5,850 (in 2024), you enter the coverage gap, sometimes called the "donut hole." In the gap, you pay 25% of the cost of brand-name drugs and generic drugs until your out-of-pocket spending reaches $7,050. After that, you pay a small copayment or coinsurance for the rest of the year. The exact amounts change each year.
Not all drugs are covered by every plan. Plans have a formulary — a list of covered medications. If your doctor prescribes a drug not on the formulary, you either pay the full cost or ask your doctor to prescribe a covered alternative.
How Medigap Changes Your Cost Sharing
Medigap (supplemental insurance) is sold by private insurers and designed to cover some or all of the cost sharing you would owe under Original Medicare. For example, a Medigap plan might cover your Part B deductible, your Part B coinsurance, or both. Some Medigap plans also cover Part A deductibles and coinsurance.
Medigap plans are standardized — Plan A, Plan B, Plan C, and so on — so the same plan offers the same coverage no matter which insurer sells it. The trade-off is that you pay a monthly premium for Medigap on top of your Medicare Part B premium. If you have Medigap, you cannot use Medicare Advantage; you must stay in Original Medicare.
How Medicare Advantage Changes Your Cost Sharing
Medicare Advantage (Part C) is an alternative to Original Medicare sold by private insurers. Instead of paying deductibles and coinsurance to Medicare, you pay copayments and coinsurance to your Advantage plan. The amounts vary by plan, but many Advantage plans have lower or zero deductibles than Original Medicare.
The catch is that Medicare Advantage plans usually require you to use doctors and hospitals in their network. If you go out of network, you pay more or the plan does not cover it at all. Advantage plans also include Part D drug coverage built in, so you do not buy it separately. Some plans include dental, vision, or hearing coverage as well.
Keeping Track of What You Owe
Your cost sharing adds up throughout the year. Medicare sends you a statement called a Summary Notice that shows what you have paid toward your deductibles and what Medicare has paid on your behalf. You can also check your costs anytime by logging into your Medicare account at Medicare.gov.
If you are on a tight budget, look for programs that help pay your premiums and cost sharing. Medicare Savings Programs (run by your state) pay some or all of your Part B premium, deductible, and coinsurance if your income is low enough. Extra Help (also called the Low-Income Subsidy) covers Part D deductibles, copayments, and coinsurance. You must meet income and asset limits to may have access to for either program.
Frequently Asked Questions
Does Medicare cover the full cost of any services?
Yes. Preventive services like annual wellness visits, cancer screenings, flu shots, and colonoscopies have no cost sharing once you have met your Part B deductible. Some Medigap plans also cover all or most of your remaining cost sharing, so you owe nothing at the point of care.
What happens if I go to a doctor who does not accept Medicare?
If a doctor does not accept Medicare at all, Medicare will not pay anything, and you pay the full bill. If a doctor accepts Medicare but does not accept assignment, Medicare still pays its 80%, but the doctor can bill you for more than the standard 20% coinsurance — up to 15% more under the limiting charge rule. Always ask before your visit whether the doctor accepts Medicare assignment.
Can I change my plan if my costs are too high?
Yes, during the annual open enrollment period (October 15 to December 7), you can switch to a different Original Medicare plan, Medigap plan, or Medicare Advantage plan. If you have a major life change — like losing employer coverage or moving — you may be able to change plans outside open enrollment.
What is the difference between a copayment and coinsurance?
A copayment is a fixed dollar amount you pay for a service — for example, $25 for a doctor visit. Coinsurance is a percentage of the total cost — for example, 20% of what Medicare approves. Coinsurance can vary depending on the cost of the service, while a copayment stays the same.
Do I have to pay cost sharing if I am in the hospital for a very long time?
Yes. Part A covers up to 90 days per benefit period, and you pay coinsurance for days 61 through 90. After 90 days, you can use lifetime reserve days (60 total), and you pay coinsurance for those too. After your lifetime reserve days are used, you pay the full cost of the hospital stay yourself.