Premiums, Copays, & More: What Medicare Costs Mean for You

Insurance terminology doesn’t need to be complicated. Words like premium, copay, and deductible are often thrown around without being clearly defined—but our advisors are here to give you clarity and local help with Medicare questions. Whether you’re planning to enroll in Medicare or just want to better understand your coverage, here’s a basic breakdown of what Medicare costs mean.

Premiums, Copays, & More: What Medicare Costs Mean


A premium is a fixed amount, billed monthly or yearly, that you pay for your Medicare plan. You pay premiums regardless of how often you use your plan.

Think of a premium like a Netflix subscription.

No matter how many times you turn on the TV (or visit the doctor), you pay the same amount each month for your plan.


A copay (also called a copayment) is fee-for-service when you go to the doctor. Copays are a fixed dollar amount that you pay when you get a covered service.

Like renting a movie.

You only pay when you need it, and only once for each movie you rent (or covered medical service you receive).


Coinsurance is very similar to a copay. You only pay coinsurance when you receive covered medical services. But instead of a fixed dollar amount, coinsurance is a fixed percentage of the total bill.

Like splitting a movie rental with a friend.

But in this case, your “friend” is your insurance company. The coinsurance percentage is outlined in your plan documents.


A deductible is an amount that you must pay out of pocket before your Medicare plan will cover costs.

Like buying four movie tickets and getting your fifth one free.

You pay for covered medical services, but only to a certain point—and then your insurance company picks up the tab.

Out-of-Pocket Maximum

An out-of-pocket maximum is a cap, set by your Medicare plan, that limits how much you can spend out of pocket in a given period of time.

Like seeing so many movies that the theater comps your tickets for the rest of the year.

Different plan options come with different caps on spending.

Medicare Costs & Plan Options

What Medicare costs mean can vary based on the plan you choose. Your plan may require some or all of these costs. If you only enroll in Original Medicare, for example, your costs will be different than if you enroll in a Medicare Advantage plan, a Supplement plan, and/or a Prescription Drug plan.

Our advisors help you assess all your plan options to find the right fit for your budget.

Get Local Help With Medicare Questions

Our advisors in Dayton and Cincinnati, Ohio can answer your questions about plans, enrollment, what Medicare costs mean, and more. Email [email protected] or schedule a call with us to get started.

Already a RetireMEDiQ client? Reach out to your dedicated advisor team by calling 1-877-222-1942 or emailing [email protected].

Would love your thoughts, please comment.x