Copays, deductibles and coinsurance — what the words mean

Why there are no numbers on this page

Deductibles reset and change every year. Copays differ between plans, and between items on the same plan. Coinsurance is calculated from approved amounts that themselves move. Any figure printed here would be wrong for most readers the day it was published, and for everyone eventually — so this page explains the machinery, and we look up the actual numbers for your actual plan before anything ships.

The four words, untangled

• Premium — what you pay to have the coverage at all, usually monthly, owed whether or not you use it.
• Deductible — what you pay out of pocket each year before the plan starts paying its part. It resets at the start of every plan year, which is why the same item can cost you more in January than in November.
• Copay — a fixed amount you pay per item or visit, set by the plan, the same regardless of the item’s price.
• Coinsurance — a percentage share of the plan-approved amount rather than a fixed amount, so your share of an expensive item is larger than your share of a cheap one.

Any given plan uses some mix of these. Original Medicare uses a deductible plus coinsurance for equipment; Advantage and commercial plans often use copays for some things and coinsurance for others. Which mechanism applies to your item is one of the specific things we verify.

Three more pieces that decide the bill

• The approved amount. Plans do not pay against a supplier’s sticker price; they pay against their own approved amount for the item, and a coinsurance share is figured from that. An enrolled supplier accepting assignment works from the approved amount — which protects you from being billed an arbitrary price.
• Rentals bill monthly, and each month carries its own share — so ‘what will I owe?’ for a rented hospital bed is a per-month answer, not a one-time answer. Rent or buy →
• Out-of-pocket maximums exist on some plans and not others. Advantage and commercial plans generally cap what you can owe in a year; original Medicare by itself does not, which is a large part of why supplemental coverage exists — a supplemental policy, retiree coverage or Medicaid alongside Medicare can pick up some or all of your share.

The questions that actually decide what you owe

1. Has your deductible been met this year?
2. Does your plan use a copay or coinsurance for this item?
3. Is the item purchased, rented, or capped rental?
4. Do you have secondary coverage, and does it pick up equipment shares?
5. Does the item need prior authorization — because an item supplied without a required authorization can become entirely your bill?

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