Cost-sharing refers to the portion of your Medicare Part D plan coverage or Medicare Advantage plan coverage that you pay (such as $30 to fill a brand name prescription or $20 to visit a doctor).
Like any insurance, when you need coverage or have a claim, a certain amount of the cost is paid by your Medicare Part D plan (or Medicare Advantage plan) and the remainder of the cost is paid by you (- and, in some situations, some of the cost may be paid by Medicare or the US Government).
Initial Deductible: During the initial deductible, you will pay 100% of the coverage costs. So if you purchase a medication with a retail cost of $100, you pay the $100. After you have met your initial deductible, your Medicare plan will begin to pay a portion of the coverage costs. So if your plan has a $415 deductible, you pay the first $415 and then your Medicare Part D plan will begin to pay a portion of the costs. Not all Medicare Part D plans have an initial deductible and the amount of the deductible can vary between plans.
Co-Payment: You pay a flat or fixed amount for a specific medication, no matter how the drug's retail price changes. For instance, if you buy a medication that usually costs $100, you may only pay a co-pay of $30. If the medication becomes more expensive and the retail price increases to $500, you will still only pay the $30 co-pay.
Co-Insurance: You pay a percentage of the retail price for a specific medication. If the drug's retail price increases, you will pay more for the same drug. For instance, if you buy a medication
that usually costs $100, you may pay co-insurance of 25% or $25. If the
medication becomes more expensive and the retail price increases to
$500, you will still pay 25% or $125 for the same medication. As the retail prices increase for medications, co-insurance costs can increase, so predicting your annual medical spending is difficult (if not impossible).
Coverage Gap or Donut Hole Discounts: Starting in 2020, the cost-sharing in the Donut Hole will be 25% of retail for generic and brand name drugs, meaning, you will pay 25% of retail costs. Here is a link showing how the Donut Hole discount changes before reaching 25%: http:/Q1FAQ.com/470.html
Cost-sharing in the Catastrophic Coverage phase: If you spend beyond your Total Out-of-Pocket limit (TrOOP) and exit the Coverage Gap or Donut Hole, you will pay the greater of a flat-fixed price or 5% of the retail cost for generic and brand name medications.