Medicare Premiums, Deductibles, and Co-Payments

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What Medicare pays toward your medical care is coverage. What you contribute out of your own pocket can be several kinds of expenses: premiums, deductibles, and co-payments. If you've had U.S.-style health insurance before, you know exactly what these terms mean. If not, here's a quick primer:

• Premium: A premium is an amount you pay each month to receive coverage. In other words, it's your entrance ticket to the program.
• Deductible: A deductible is an amount you pay before coverage kicks in. You can think of it as a kind of down payment before getting the goods.
• Co-payment: This amount is what you pay as your share of the cost of each service you receive. Strictly speaking, co-pays are fixed dollar amounts (such as $20), whereas coinsurance is the correct term when your share is a percentage of the cost (such as 20 percent).

If you had insurance in the past, you probably paid a single premium for all your health care and a single deductible for the whole year (maybe a hefty one if you were in a high-deductible plan), with co-pays for each service. But Medicare, of course, is divided into four parts, each with its own costs and charges. The following sections explain each set of costs under Part A, Part B, Part D, and Medicare Advantage (Part C) plans. Finally, the figure shows the costs for Parts A, B, and D at a glance. Note: The costs in the chart are for people enrolled in traditional Medicare plus stand-alone Part D drug plans. Medicare Advantage plan costs are different and vary among plans.