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A copayment is a fixed amount or fee that you must pay out of pocket for certain medical services. For example, you may have a $20 copayment for each doctor's visit or a $25 copayment for a specialist visit. Coinsurance is also an amount you must pay for services, but it is a percentage, such as 20 percent, rather than a fixed amount. There are a number of strategies that can help you pay less for your insurance copayments and coinsurance.
Consider your savings versus your Medigap premium costs
In general, under Medicare Part B, once you have met your annual deductible, Medicare will pay 80 percent of a "reasonable charge," which is also called the Medicare-approved amount. You are then responsible for the remaining 20 percent coinsurance.
For example, if the Medicare-approved amount for a doctor's office visit is $65:
- Medicare will pay 80 percent of the Medicare-approved amount, or $52.
- You are responsible for paying the remaining 20 percent, or $13, which is your coinsurance amount.
A Medigap policy (also called Medicare supplemental insurance) can help lower your medical costs by covering your Original Medicare (Part A Hospital Insurance and Part B Medical Insurance) copayments or coinsurance amounts. So with this example, if you have a Medigap policy that covers the full Part B coinsurance, you will save $13 every time you see your doctor.
Whether it is worth having a Medigap policy depends on how often you go to the doctor or use other medical services covered by Medicare. If the amount the Medigap policy pays is more than the premium you pay for the policy, you have made a wise choice. On the other hand, if you are paying $2,500 a year for your Medigap policy but only saving $400 a year on copayments, you might want to consider switching to another Medigap policy that may provide less coverage but has a lower monthly premium.
Save more by carefully choosing your Medigap plan
While saving on copayments and coinsurance is a good thing, you need to fully understand the costs and benefits of your plan. Whether a particular plan works for you depends on your medical needs, medical expenses, and budget. The cost of a plan depends on the kind of plan you choose, your age, where you live, and the insurance company offering the coverage. That's why it is important to do your homework and carefully choose your Medigap plan so you get the best deal for your health and financial needs.