What Factors Affect Medicare Coinsurance?

In the US, Medicare coinsurance — also known as the co-pay — refers to the percentage, usually 20%, of a medical provider's bill that a Medicare beneficiary is financially responsible for paying. The amount of coinsurance, however, is not calculated until after the beneficiary has paid any required deductibles that typically begin each insurance year. Determining the specific amount of Medicare coinsurance required of a beneficiary can be a confusing process as it is influenced by public law as well as rules established by private insurance companies that offer supplemental Medicare insurance also known as a "Medicare Advantage Plan." Both sets of regulations change often and usually to decrease the amount of benefits provided. Factors that affect Medicare coinsurance costs include Congressional law, supplemental Medicare policies, income and age.

The amount of Medicare coinsurance for Medicare Part A (hospitalization insurance) and Medicare Part B (medical insurance) is established by law. A specific amount required of the Medicare beneficiary is established along a tier system according to the length of a patient's hospitalization. Lengthy stays in excess of 60 days could quickly exhaust the resources of most middle-class Americans in the absence of a Medicare advantage plan. Medicare Part B has a deductible after which a beneficiary is responsible for 20% of the amount of the bill that Medicare approves. In other words, Medicare establishes an approved amount for every billable procedure that is usually much less than the amount a healthcare provider charges: it is 20% of this amount that becomes the Medicare coinsurance.

Another factor that influences the amount of Medicare coinsurance — the cost for care for which the patient is ultimately responsible — is whether or not the Medicare beneficiary has the means to purchase and is covered by a supplemental policy or a Medicare advantage plan. The cost of these plans varies widely as do the benefits they provide to the policyholder. The amount of the benefit provided by the advantage plan is applied to the 20% of the amount of the Medicare approved cost and not the total amount of the bill invoiced by the healthcare provider. The beneficiary's income is a factor that can affect the amount of Medicare coinsurance as far as the ability of the beneficiary to purchase a supplemental policy that is typically referred to as Medicare Part C (supplemental insurance).

Medicare coinsurance for Medicare Part D (prescription drug coverage) is determined by one of two factors. If the beneficiary is a member of a general Medicare drug plan, then he or she is covered for certain drug at a certain co-pay amount, often calculated on a tier level. For beneficiaries, however, who are enrolled in a Medicare Part C supplemental plan, the extent of their Part D prescription coverage depends entirely on the benefits of that particular program. As with the other benefits, co-payment amounts vary widely and some drugs and drug classes are simply not covered at all.