Updated: Nov 8
Medicare Advantage Plans promise benefits beyond Original Medicare, but do they help pay the 20% coinsurance you’re responsible for under Medicare Part B? This is an important question for anyone trying to understand how Medicare Advantage Plans work and what out-of-pocket costs may apply.
What is the 20% Coinsurance Under Medicare Part B?
First, it’s helpful to understand what the 20% coinsurance refers to. Medicare Part A and B covers a wide range of medical services like doctor visits, tests, durable medical equipment, and more. Under Original Medicare, beneficiaries typically pay 20% of the Medicare-approved amount for Part B services in the form of coinsurance after meeting the Part B deductible each year.
For example, if your doctor bills Medicare $100 for an office visit, you’d pay $20 as your coinsurance (20% of $100). Medicare would cover the remaining $80. The Part B deductible in 2023 is $226, so you’d need to pay that first before coinsurance kicks in.
This 20% coinsurance can add up throughout the year as you use medical services covered under Part B. There's no cap on how much coinsurance you might owe overall.
How Medicare Advantage Plans Approach Coinsurance
Rather than pay 20% coinsurance for each Part B service, most Medicare Advantage Plans use copayments. This means you pay a flat dollar amount, like $10 or $50, when you get care.
While copays make it easier to plan for costs upfront, keep in mind that:
Copays can still vary depending on the type of care and can be higher than 20% coinsurance would be for the same service under Original Medicare.
Plans typically charge copays until you reach the plan's out-of-pocket maximum. This is a cap on your total in-network costs for the year. Once you hit this amount, the plan will cover 100% of your remaining in-network care.
Medicare Advantage Plans have a yearly maximum out-of-pocket limit set by Medicare. For 2023, this limit is $8,300 for in-network services. This offers financial protection compared to Original Medicare which has no cap on your coinsurance costs.
While copayments help make costs more predictable, some Medicare Advantage Plans are required or do still use coinsurance for certain services. You'll need to look closely at each plan’s benefits to see what the copays and coinsurance rules are.
The plan’s summary of benefits shows cost-sharing details for each benefit category like hospital stays, doctor visits, diagnostic tests, and prescription drugs. This will spell out which services require copays versus coinsurance.
Does Medicare Advantage Cover the 20% Part B Coinsurance?
In Original Medicare, you're responsible for 20% of the Medicare-approved cost after the Part B deductible. Medicare Advantage won’t eliminate this coinsurance altogether. The plan may reduce the percentage you pay to 10% or 15% for example. It could also replace coinsurance with copays for many services.
Some key things to know:
Medicare Advantage can’t charge more coinsurance than Original Medicare for some services. These include mental health care, dialysis, chemotherapy, and skilled nursing facility care. If a service has 20% coinsurance under Original Medicare, that’s the maximum a Medicare Advantage Plan can charge.
Plans may use coinsurance for some types of care. For example, a plan may charge 10% or 20% coinsurance for diagnostic tests, lab work, diagnostic and therapeutic radiology, outpatient hospital services, and durable medical equipment. Plans have flexibility to set their own coinsurance rules.
Total out-of-pocket costs are capped. While coinsurance costs can add up under Original Medicare, Medicare Advantage Plans put a limit on your total expenses for in-network care each year. Once you reach the plan’s out-of-pocket maximum, you'll pay nothing for additional covered services from in-network providers.
Some plans pay part of the Part B premium. This essentially reduces your out-of-pocket costs. Original Medicare doesn’t cover any portion of the Part B premium, which is over $170/month in 2023 for most beneficiaries. Some Medicare Advantage Plans will contribute $20 or more per month to offset this premium.
Many plans offer extra benefits beyond Original Medicare. These can include dental, vision, hearing, transportation, meal delivery, gym memberships, and more. Taking advantage of these perks comes with little or no cost to you.
Strategies for Managing Medicare Advantage Costs
While Medicare Advantage Plans structure costs differently than Original Medicare, this doesn’t necessarily mean higher overall expenses for you. However, costs can vary significantly between plans. It pays to understand how your plan works and take steps to reduce your out-of-pocket spending.
Consider these cost-saving strategies:
Choose your plan carefully. Compare several plans’ copays, coinsurance, drug coverage, and maximum out-of-pocket limits. Run estimates of your total costs under different plans. Enroll in the plan that offers the best coverage and value for your medical needs.
Use network providers. Staying in-network helps you avoid penalties and higher cost sharing. Check that your doctors, hospitals, and other providers are in a plan’s network before joining.
Use preferred pharmacies. Most plans have preferred and standard pharmacy networks. Copays are usually lower at preferred pharmacies which can save you money on medications.
Take advantage of preventive care. Medicare Advantage Plans must cover all preventive services that Original Medicare does at no cost to you. This includes cancer screenings, annual wellness visits, flu shots, and more. Staying up-to-date on these services can help you avoid costly medical problems.
Check if you qualify for Extra Help. People with limited income and resources can get help from Medicare to pay Medicare Advantage costs. Extra Help can cover all or part of your premiums, deductibles, and copays.
Consider a Medigap policy. If you join a Medicare Advantage Plan but decide to switch back to Original Medicare, you can also purchase a Medigap policy at that point. This can help cover coinsurance, copays, and deductibles in Original Medicare.
The Bottom Line
Does Medicare Advantage pay the 20%? Generally, no. Most plans will have you pay copays or lower coinsurance percentages instead. But Medicare Advantage does put a cap on your out-of-pocket costs which Original Medicare does not. Focus on choosing a plan with affordable copays and coinsurance for the services you use. Also consider any extra benefits the plan provides. With smart plan selection and cost-saving steps, Medicare Advantage can give you strong overall coverage with financial protection.
We’re Here to Help
You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Next Steps Insurance a Call at (717)-271-2326. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.
Does Medicare Advantage or Original Medicare Part B pay the 20 percent premium out-of-pocket cost?
No, neither Medicare Advantage nor Original Medicare Part B covers the 20 percent premium out-of-pocket cost. This cost is the responsibility of the beneficiary in Traditional Medicare.
What is the difference between Original Medicare and Medicare Advantage?
Original Medicare is the traditional Medicare program consisting of Part A (hospital insurance) and Part B (medical insurance), which is managed by the Centers for Medicare and Medicaid Services (CMS). Medicare Advantage, on the other hand, is an alternative way to receive Medicare benefits through private insurance companies approved by Medicare.
Does Original Medicare provide prescription drug coverage?
No, Original Medicare (Part A and Part B) does not include prescription drug coverage. To obtain prescription drug coverage, beneficiaries in Traditional Medicare can enroll in a Medicare Part D Plan or consider other options such as a Medicare Supplement (Medigap) plan.
What is the cost sharing for beneficiaries in Traditional Medicare?
Beneficiaries in Traditional Medicare are responsible for paying various out-of-pocket costs, including copayments, coinsurance, and deductibles. The specific cost sharing amounts depend on the services received.
Do Medicare Advantage Plans also require an additional premium?
Yes, some Medicare Advantage Plans may require beneficiaries to pay an additional premium in addition to their Medicare Part B premium. However, not all Medicare Advantage Plans charge an additional premium, and the amount can vary.
Can beneficiaries in Traditional Medicare join a separate Medicare drug plan?
Yes, beneficiaries in Traditional Medicare can join a separate Medicare Part D Plan to obtain prescription drug coverage. These plans are offered by private insurance companies approved by Medicare.
Are beneficiaries covered by Traditional Medicare required to enroll in Medicare Advantage?
No, enrollment in Medicare Advantage is optional for beneficiaries in Traditional Medicare. It is their choice whether to join a Medicare Advantage Plan or continue with Original Medicare.
What does Medicare cover?
Medicare coverage includes hospital stays (Part A), medical services such as doctor visits and outpatient care (Part B), and prescription drug coverage (Part D), among other benefits. It is important to understand the specific details of each Part And any additional coverage obtained through Medicare Advantage or Medicare Supplement Plans.
Can beneficiaries use Medicare for all their healthcare needs?
Medicare provides coverage for a wide range of healthcare services; however, it may not cover all healthcare needs. It is important to review the coverage details and limitations of each specific Medicare Plan.
How do I enroll in Medicare Advantage?
To enroll in Medicare Advantage, you must first be eligible for Medicare. During the initial enrollment period, you can choose to enroll in a Medicare Advantage Plan instead of Original Medicare. You can also make changes during the annual open enrollment period or special enrollment periods if eligible.