How does Medicare work?

The big 4-Medigap cost sharing

Medigap and Medicare aren’t much different from what you’re used to when it comes to insurance policies. Just like other types of insurance, you’re subject to premiums, deductibles, copayments, and coinsurance. Today we will hone in on these four types of cost sharing methods.

1. Premium
   With any Medicare Supplement Insurance Plan, you’ll find a monthly premium. This charge is a fixed payment, established when you first enroll in a Medigap Plan. Typically, the more coverage your plan offers, the higher the monthly premium. For instance, Medigap Plan F offers a more encompassing list of benefits than Medigap Plan A does so Plan F usually has a higher premium.
2. Deductible
   This is a very familiar term when it comes to insurance. If you have home owners insurance and you need to have your roof replaced from hail storm damage, you must pay a deductible, or a predetermined set amount of dollars, before your home owners insurance will help pay for roof repair. It works the same way with Medicare. One perk about Medigap Insurance is that some policies will help pay for your Medicare Part A or Medicare Part B deductible.
3. Copayment
   A copayment is a set amount which can be considered a fee for services. For instance, a doctor visit may incur a $20 copay fee at the end of the visit. With a Medicare Prescription Drug plan, you are likely to pay a copayment when you pick up your prescription at the pharmacy.
4. Coinsurance
   This payment is like splitting the cost of your health bill. A Medigap company will pay a certain percentage and you pay the rest. Medicare usually pays 80% of the Medicare approved amount while the beneficiary pays the remaining 20%.