Coinsurance is a
type of cost-sharing used by Medicare Part D prescription drug plans or Medicare Advantage plans referring to a Medicare plan member paying a percentage of the medication's negotiated retail drug cost or paying a percentage of the cost for a covered healthcare procedure.
In general, insurance works by sharing the cost of coverage between the insurance company (or government) and the plan member.
Insurance
cost-sharing can be separated into either (1) coinsurance or percentage of the coverage cost or (2) copayment or a fixed priced for specific coverage.
So, like other insurance, coinsurance within a Medicare Part D plan means you would pay a percentage of the retail drug cost for a specific drug and a
Medicare Part D plan may have a fixed coinsurance rate (25%) for all
formulary drugs - or the plan may give a specific coinsurance rate for
all drugs assigned to a logical grouping or formulary Tier of
medications (Tier 4 drugs have a 33% coinsurance rate) - and use a fixed copayment for other formulary tiers.
As an example, if Tier 5 "Specialty drugs" have 25% coinsurance and you
purchase a covered Tier 5 medication with a monthly retail cost of $100 –
you would pay $25 and your plan would pay $75. So, the Medicare
beneficiary is responsible for a certain percentage of the prescription
costs (such as 25%) and the insurance company is responsible for the
remaining percentage of the prescription cost (in this example, 75%).
Example of prescription drug coinsurance... the medication
NIACIN 500 MG TABLET
is a Tier 4 medication costing the plan member 36% coinsurance per
month on one plan and another plan may have it classified as a Tier 4
medication, costing 50% coinsurance per month.
Yet other Medicare drug plans group this medication as a Tier 2
medication with a flat $15 copayment. The retail cost for the
medication is estimated at $900. In this example, the copayment is much more
cost-effective.
However, with many other medications, coinsurance cost-sharing is more
cost-effective than a fixed copay. It all depends on the medication,
its formulary drug tier, and the Medicare Part D plan's negotiated
retail drug price.
You can compare the cost-sharing tier, average retail cost, and drug
usage management restrictions for each plan covering a particular
medication using our Drug Finder (
Q1Rx.com).
Cost-Sharing and Medicare Advantage plans.
Like stand-alone Medicare Part D plans, in a Medicare Advantage plan, you may pay a percentage of
the cost of a health-care procedure or you may pay a flat copay per
visit. For example, as you can see in the graphic below, you may pay a
$5 copay for a Primary Care Physician (PCP) visit.
Here is an example of how healthcare cost-sharing (c
oinsurance and copay)
can be seen in a Medicare Advantage plan coverage. You can review the
Medicare Advantage plans in your area (if available) using our Medicare
Advantage Plan Finder:
MA-Finder.com/44319 - just choose your state and county or enter your ZIP to begin.
For more information, please see also our Frequently Asked Questions (FAQ) about
"Copayment" or "Copay" and "
What is Medicare Part D or Medicare Advantage plan cost-sharing?"