What Medicare pays toward your medical care is coverage. What you contribute out of your own pocket can be several kinds of expenses: premiums, deductibles, and co-payments. If you've had U.S.-style health insurance before, you know exactly what these terms mean. If not, here's a quick primer:
- Premium: A premium is an amount you pay each month to receive coverage. In other words, it's your entrance ticket to the program.
- Deductible: A deductible is an amount you pay before coverage kicks in. You can think of it as a kind of down payment before getting the goods.
- Co-payment: This amount is what you pay as your share of the cost of each service you receive. Strictly speaking, co-pays are fixed dollar amounts (such as $20), whereas coinsurance is the correct term when your share is a percentage of the cost (such as 20 percent).