Coinsurance
The percentage of costs a Medicare beneficiary shares with Medicare after meeting the deductible; Part B standard coinsurance is 20% of the Medicare-approved amount with no dollar cap.
Coinsurance under Medicare is the share of approved costs paid by the beneficiary after the applicable deductible. Part B coinsurance is standardized at 20% of the Medicare-approved amount for most services — physician visits, outpatient procedures, DME, lab tests. Because there is no out-of-pocket maximum in Original Medicare, 20% coinsurance can accumulate to catastrophic levels during a serious illness. A $500,000 cancer treatment course would generate $100,000 in 20% coinsurance exposure.
Part A coinsurance works differently: days 1–60 of a hospital stay require only the per-benefit-period deductible (no daily coinsurance). Days 61–90 require $408/day (2024) coinsurance. Days 91–150 (lifetime reserve days) require $816/day. Skilled nursing facility coinsurance is $0 for days 1–20, then $204/day for days 21–100, and 100% of costs beyond day 100.
Medigap plans are specifically designed to cover coinsurance. Plan G covers all Part A coinsurance (including SNF days 21–100) and all Part B coinsurance; the beneficiary pays only the Part B deductible. In Medicare Advantage plans, coinsurance is replaced by plan-specific copays and a mandatory annual out-of-pocket maximum (capped at $8,850 in 2024 for in-network services).
Real-World Example
A Plan G Medigap holder received outpatient chemotherapy generating $220,000 in Medicare-approved charges; Medicare paid 80% ($176,000) and Plan G paid the remaining 20% ($44,000), leaving the patient with zero additional medical bills beyond the $174.70/month premium.