Does Medicare Advantage Cover the 20% Not Covered by Original Medicare?

Original Medicare typically covers 80% of the Medicare-approved amount for covered medical services, after you meet the Part B deductible. As a Medicare beneficiary, you are responsible for paying the remaining 20% coinsurance. However, with a Medicare Advantage plan, your out-of-pocket costs are structured differently.

The 20% Coinsurance in Original Medicare

Under Original Medicare Part B, after you pay the annual deductible ($226 in 2023), you will owe 20% coinsurance for most doctor visits, outpatient procedures, and durable medical equipment.

For example, say a doctor’s visit costs $200. If you have met your deductible:

  • Medicare pays $160 (80% of the approved $200 amount)
  • You owe $40 (20% of $200)

This 20% coinsurance applies to most Part B services. There is no annual cap on how much you have to pay out-of-pocket under Original Medicare.

That’s why many enroll in supplemental coverage like Medigap or retiree plans to cover some or all of the 20% coinsurance. Others may qualify for Medicaid to help with Medicare costs.

Medicare Advantage and Cost Sharing

Medicare Advantage (Part C) plans are offered by private insurers as an alternative way to get your Medicare benefits. One of the differences is how cost sharing works in Medicare Advantage vs. Original Medicare.

With Medicare Advantage plans, the 20% coinsurance does not apply. Instead, you will pay:

  • Monthly premium for your Medicare Advantage plan (ranges from $0 – $170 depending on plan and region for 2023)

  • Medicare Part B premium ($164.90 for most in 2023)

  • Annual deductible ( varies by plan, $0 to $350 in 2023)

  • Copayments or coinsurance for services

  • Maximum annual out-of-pocket limit (cannot exceed $8,300 in 2023)

Your Medicare Advantage plan copays and coinsurance replace the 20% coinsurance. Some key points:

  • Copays – A fixed dollar amount you pay for a service (like a $10 copay for a primary care visit or $45 for a specialist visit).

  • Coinsurance – A percentage of the total cost you pay for a service (like 20% for durable medical equipment).

  • Out-of-pocket max – Once you reach this limit, you pay nothing for Part A and Part B services. Protects you from high costs.

  • No Medigap – You cannot purchase a Medigap or Medicare Select policy to cover cost sharing under a Medicare Advantage plan.

Is Cost Sharing More or Less?

Whether your out-of-pocket costs will be more or less under Medicare Advantage varies:

  • Premiums – Most Medicare Advantage plans charge a monthly premium on top of your Part B premium. This increases your annual costs.

  • Deductible – The Medicare Advantage deductible may be more or less than the $226 Part B deductible. Plans can charge $0 to $350 in 2023.

  • Copays – The copays may be more or less than 20% coinsurance depending on the service. Doctor visit copays are usually less.

  • Max out-of-pocket limit – This annual cap on costs provides financial protection not available in Original Medicare.

  • Medigap – You cannot purchase a Medigap policy to cover your Medicare Advantage cost-sharing. This may raise your costs compared to having Original Medicare with Medigap.

  • Additional benefits – Many Medicare Advantage plans offer dental, vision, hearing, gym memberships, and other extra benefits not covered by Original Medicare, which may help offset higher cost sharing.

Whether you end up spending more or less out of pocket depends entirely on the specific Medicare Advantage plan you select and how much care you need.

It’s important to evaluate premiums, deductibles, copays, maximum out-of-pocket limits, and extra benefits when comparing plans. Do the math based on your expected medical services for the upcoming year.

Key Differences in Cost Sharing

Original Medicare Medicare Advantage
20% coinsurance after deductible Copays or coinsurance for services
No annual out-of-pocket limit Out-of-pocket limit protects from high costs
You can get Medigap to cover coinsurance Cannot purchase Medigap plans
No extra benefits like dental or vision May include additional benefits not covered by Original Medicare
No monthly premium beyond Part B Usually includes an additional monthly plan premium

Can I Switch Back to Original Medicare?

If you find Medicare Advantage costs too high, you can switch back to Original Medicare during certain enrollment periods:

  • Medicare Advantage Open Enrollment Period – January 1 to March 31 each year
  • Medicare Advantage Disenrollment Period – January 1 to February 14 each year
  • Initial Enrollment Period – When first eligible for Medicare at 65
  • General Enrollment Period – January 1 to March 31 each year

You may also qualify for a Special Enrollment Period allowing you to switch plans or go back to Original Medicare if certain events occur like moving.

If you have had Medicare Advantage for over 12 months, you can purchase a Medigap policy when you switch back to Original Medicare. This will help cover the 20% coinsurance.

Does Medicare Advantage Cover Everything Original Medicare Does?

Yes, Medicare Advantage plans must cover all Medicare Part A and Part B services. They cannot charge more for certain services like chemotherapy and renal dialysis than what you would pay in Original Medicare.

However, Medicare Advantage plans can require prior authorization for services and restrict you to network providers, except in emergencies. They also design different cost-sharing structures through copays and coinsurance.

But the overall medical services covered are the same as under Original Medicare. Medicare Advantage plans simply change how much you pay out of pocket and some of the rules around receiving that care.

Key Takeaways

  • The 20% coinsurance does not apply to Medicare Advantage plans. Instead, you pay copays or coinsurance amounts that are structured differently.

  • Medicare Advantage plans cap your annual out-of-pocket spending, which provides financial protection compared to Original Medicare.

  • But Medicare Advantage monthly premiums and deductibles may increase your overall costs in some cases. No Medigap coverage is allowed.

  • Carefully compare the cost-sharing differences to determine if Original Medicare or Medicare Advantage will be more affordable based on your healthcare needs.

5 Things Medicare Doesn’t Cover (and how to get them covered)


What is the biggest disadvantage of Medicare Advantage?

The biggest disadvantage of Medicare Advantage is you’ll have a more limited choice of doctors and medical offices than you would with Original Medicare. Medicare Advantage plans can also cost more overall if you have complex medical needs. These plans are best if you don’t need expensive treatments or tests.

Who pays the 20% of a Medicare B claim?

After the beneficiary meets the annual deductible, Part B will pay 80% of the “reasonable charge” for covered services, the reimbursement rate determined by Medicare; the beneficiary is responsible for the remaining 20% as “co-insurance.” Unfortunately, the “reasonable charge” is often less than the provider’s actual …

Does Medicare Advantage cover 100 percent of hospital bills?

You may have to pay a portion of the costs, called coinsurance, if you stay in a hospital or skilled nursing facility for a long time. Medicare covers your first 60 days as a hospital inpatient, but in 2023, you pay $400 a day for days 61 to 90 and $800 a day for up to 60 lifetime reserve days.

What is 20% of Medicare?

You’ll usually pay 20% of the cost for each Medicare-covered service or item after you’ve paid your deductible. If you have limited income and resources, you may be able to get help from your state to pay your premiums and other costs, like deductibles, coinsurance, and copays.

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