What does the term "coinsurance" mean in Medicare?

The term "coinsurance" in Medicare refers to the percentage of medical costs that beneficiaries are responsible for paying out-of-pocket after they have met their deductible. This cost-sharing mechanism is designed to ensure that beneficiaries contribute to the costs of their healthcare services while still receiving coverage from Medicare.

For example, if a beneficiary has a Medicare plan where the coinsurance is set at 20%, and they have already paid their deductible, they will be responsible for paying 20% of the allowed amount for any covered Medicare service. The remaining 80% would be covered by Medicare. This system encourages the appropriate use of medical services by sharing the financial responsibility between Medicare and the beneficiary.

Understanding coinsurance is crucial for beneficiaries because it directly affects their out-of-pocket expenses for medical care. It also highlights the importance of knowing one's deductible status and the specific coinsurance rates associated with their Medicare plan, as these factors can significantly impact overall healthcare costs.