Medicare Cost-Sharing: Deductibles, Copays, Coinsurance & Medigap Plans Explained

Medicare cost-sharing has four components: (1) **Premiums** - the monthly amount you pay for coverage regardless of whether you use services; (2) **Deductibles** - the amount you pay before Medicare starts covering costs; (3) **Copays** - a fixed dollar amount per service (common in Medicare Advantage); (4) **Coinsurance** - a percentage of the cost you pay after the deductible (Original Medicare typically charges 20%).

Medigap cost-sharing plans offer lower monthly premiums in exchange for sharing some Medicare cost-sharing with you. They are a good option for beneficiaries who are generally healthy and want to reduce their premium while still having protection against catastrophic costs.

Plan K covers 50% of most cost-sharing (with a $7,220 OOP limit in 2026). Plan L covers 75% (with a $3,610 OOP limit). Plan M covers the Part B deductible and 50% of the Part A deductible. Plan N covers most costs but requires copays of up to $20 for office visits and $50 for ER visits.

Original Medicare (Parts A and B) has no annual out-of-pocket maximum. If you have a serious illness or long hospital stay, your costs can be substantial. The 20% Part B coinsurance alone can add up quickly for expensive procedures or specialist visits.

For example, a $100,000 surgery would leave you with a $20,000 coinsurance bill under Original Medicare alone. This is why most beneficiaries choose either a Medigap plan or Medicare Advantage (which has an OOP cap).

Medicare Advantage plans replace Original Medicare and typically use fixed copays instead of percentage-based coinsurance. In 2026, the maximum out-of-pocket limit for MA plans is $9,350 for in-network services. Once you hit the OOP cap, the plan pays 100% of covered services for the rest of the year.