Medicare pays a percentage of your medical costs, but the amount depends on which part of Medicare you have and what type of care you receive

Medicare does not pay 100% of your medical bills. How much it pays varies by the type of service, which Medicare part covers it, and whether you have chosen Original Medicare or a Medicare Advantage plan. Original Medicare (Parts A and B) typically pays 80% of approved services after you meet your deductible, leaving you responsible for the remaining 20%. Medicare Advantage plans (Part C) set their own payment structures and often charge copays or coinsurance instead of percentages.

The percentage Medicare pays also depends on where you receive care. Hospital stays are covered differently than doctor visits, which are covered differently than prescription drugs. Understanding these breakdowns helps you predict what you will owe out of pocket.

Key Takeaways

  • Original Medicare Part A covers hospital stays at 100% after a deductible, but only for the first 60 days; days 61–90 require coinsurance payments from you.
  • Original Medicare Part B covers doctor visits and outpatient services at 80% after you meet your annual deductible; you pay the remaining 20%.
  • Medicare Advantage plans use copays and coinsurance instead of percentages, and the amounts vary by plan and by service type.
  • Prescription drug coverage (Part D) pays a percentage that changes based on which tier your drug falls into and whether you have reached the coverage gap.
  • Supplemental insurance (Medigap) can cover the percentages and coinsurance that Original Medicare leaves unpaid.

What Original Medicare Part A Pays for Hospital Care

Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services. For a hospital stay, Medicare pays 100% of approved charges for days 1 through 60 in a benefit period, after you pay a one-time deductible. The deductible amount changes each year; you can find the current amount on Medicare.gov.

Beyond 60 days, Medicare's payment drops. For days 61 through 90, you pay coinsurance (a fixed dollar amount per day, not a percentage) and Medicare covers the rest. If you stay longer than 90 days, you enter your "lifetime reserve days" — a limited pool of additional covered days for which you also pay coinsurance. Once those reserve days are exhausted, you pay 100% of hospital costs yourself.

Skilled nursing facility care follows a similar structure. Medicare pays 100% for the first 20 days after a may have access to hospital stay, then requires you to pay coinsurance for days 21 through 100. After day 100 in a benefit period, you pay all costs.

What Original Medicare Part B Pays for Doctor Visits and Outpatient Services

Part B covers doctor visits, outpatient surgery, diagnostic tests, and other outpatient services. After you meet your annual Part B deductible, Medicare pays 80% of the approved amount for most services, and you pay 20%. This 80/20 split is the standard for Part B, though some preventive services are covered at 100% with no deductible.

The key word is "approved amount." Medicare sets an approved amount for each service based on a fee schedule. If your doctor charges more than the approved amount and does not accept Medicare assignment, you may owe the difference on top of your 20% coinsurance. Doctors who accept assignment agree to bill only the approved amount, so you know exactly what you will owe.

Mental health services, physical therapy, and other specialized outpatient care also follow the 80/20 rule after the deductible. However, there are limits on how many visits Medicare will cover in a year for some services, such as physical therapy.

How Medicare Advantage Plans Pay Differently

Medicare Advantage (Part C) plans are an alternative to Original Medicare. Instead of the 80/20 percentage split, these plans use copays and coinsurance amounts that the plan itself sets. One plan might charge a $25 copay for a doctor visit, while another charges 20% coinsurance. The payment structure varies by plan and by service.

Medicare Advantage plans must cover everything Original Medicare covers, but they can structure the costs however they choose, as long as the out-of-pocket maximum does not exceed the limit set by Medicare each year. Many plans also include prescription drug coverage (Part D) built in, whereas Original Medicare requires a separate Part D plan.

Because each plan sets its own copays and coinsurance, you cannot assume one plan's payment structure matches another's. You need to review the specific plan's documents to know what you will pay for each type of service.

What Medicare Pays for Prescription Drugs (Part D)

Part D covers prescription medications through standalone plans (if you have Original Medicare) or through Medicare Advantage plans that include drug coverage. Part D uses a tiered system: drugs are sorted into tiers, and your copay or coinsurance depends on which tier your drug is in.

In 2024, Part D coverage has four main stages. In the initial coverage stage, you pay a copay or coinsurance for each prescription until your total drug costs reach a certain amount. Once you reach that amount, you enter the coverage gap (sometimes called the "donut hole"), where you pay a higher percentage of drug costs. After your out-of-pocket spending reaches another threshold, you enter catastrophic coverage, where Medicare pays most of the cost and you pay a small copay.

The exact percentages and dollar amounts change each year and vary by plan. Your Part D plan documents will show your specific copays and coinsurance for each tier and stage.

How Supplemental Insurance (Medigap) Affects Your Out-of-Pocket Costs

Medigap policies are sold by private insurance companies and are designed to cover costs that Original Medicare does not pay — the 20% coinsurance, deductibles, and copays. If you have Medigap coverage, you typically pay your Medigap premium and then have little or no out-of-pocket cost for covered services, because Medigap pays what Medicare does not.

Medigap does not change what Medicare pays; it changes what you pay. Medicare still pays 80% of an approved service, but your Medigap policy covers your 20% share. Different Medigap plans (labeled A through N) cover different combinations of costs, so the protection you receive depends on which plan you choose.

Medigap is not available to people with Medicare Advantage plans. If you have a Medicare Advantage plan, you cannot buy Medigap coverage.

Understanding Your Out-of-Pocket Maximum

Both Original Medicare and Medicare Advantage have limits on how much you can spend out of pocket in a year, but they work differently. Original Medicare has no overall out-of-pocket maximum, which means theoretically your costs could be unlimited if you have major medical expenses and no Medigap coverage. However, if you have Medigap, your out-of-pocket costs are limited by what your Medigap plan covers.

Medicare Advantage plans do have an out-of-pocket maximum set by Medicare. Once you reach that maximum in a calendar year, the plan pays 100% of covered services for the rest of the year. The maximum amount changes each year.

Knowing your plan's out-of-pocket maximum helps you budget for medical expenses and understand your financial risk if you have a serious illness or injury.

Frequently Asked Questions

Does Medicare pay 100% of anything?

Yes. Original Medicare Part A pays 100% of approved inpatient hospital costs for days 1–60 in a benefit period, after you pay the deductible. Part B covers certain preventive services at 100% with no deductible, such as annual wellness visits and cancer screenings. Medicare Advantage plans may also cover some services at 100%, depending on the plan.

What if my doctor charges more than Medicare's approved amount?

If your doctor accepts Medicare assignment, they agree to charge only the approved amount, and you pay your share of that amount. If your doctor does not accept assignment, they can charge up to 15% more than the approved amount, and you are responsible for that extra charge on top of your normal coinsurance.

Can I reduce what I pay out of pocket?

If you have Original Medicare, buying a Medigap policy can significantly reduce your out-of-pocket costs by covering the 20% coinsurance and deductibles. If you have Medicare Advantage, choosing a plan with lower copays or coinsurance can reduce costs, though premiums may be higher. Prescription drug coverage (Part D) also reduces medication costs.

Does Medicare pay for dental, vision, or hearing care?

Original Medicare does not cover routine dental, vision, or hearing care. Some Medicare Advantage plans include limited coverage for these services, but the amount they pay varies by plan. You would need to review your specific plan's coverage to know what is included.

What happens if I do not have Medigap and my medical bills are very high?

Without Medigap, you pay the 20% coinsurance on all Part B services, plus any deductibles and copays. If you have major medical expenses, these costs can add up quickly. You cannot buy Medigap after your initial enrollment period without potentially paying higher premiums, so it is important to understand your coverage options when you first become may be able to access for Medicare.