How Medicare Part B drug cost sharing works

The annual Part B deductible

Before Medicare pays anything toward a Part B service, the patient must first satisfy the annual Part B deductible — $283 for calendar year 2026, adjusted most years by CMS. The deductible applies once per calendar year across all Part B services combined, not per drug or per diagnosis: an office visit, a lab claim and a drug infusion in the same year all draw from the same running total, and once it's met (from any combination of services) it stays met for the rest of the year.

Only two standardized Medigap plans cover this deductible: Plan C and Plan F — and neither has been sold to someone newly eligible for Medicare on or after January 1, 2020 (existing holders keep their coverage). Every other plan, including A, B, D, G, K, L, M and N, leaves the patient responsible for the full deductible amount before that plan's coinsurance coverage kicks in.

What each Medigap plan (A–N) covers

Ten standardized Medigap plans are sold today, lettered A through N. Each one answers the same two questions differently: does it cover the Part B deductible, and how much of the 20% coinsurance does it cover?

Plans E, H, I and J are legacy designs no longer sold to new enrollees and are omitted. On a high-value drug claim, the K/L annual out-of-pocket maximum can matter a great deal: a single expensive infusion's 20% coinsurance can be large enough to carry a Plan K or L patient most of the way to that yearly cap by itself.

Sequestration's effect on the payment, not the patient share

The federal budget sequester cuts 2% from Medicare's payment to the provider on most Part B claims, turning the effective drug rate from ASP+6% into roughly ASP+4.3% on the 80% Medicare pays. This is a cut to what the provider collects from Medicare — it does not change what the patient owes. The patient's 20% coinsurance is still calculated against the full, un-sequestered ASP+6% allowed amount, so sequestration is invisible on a patient's bill even though it shows up in a practice's reimbursement.

Assignment: why it caps what the patient can be charged

A provider who accepts assignment agrees to accept Medicare's allowed amount as payment in full for a covered service, and can bill the patient only the standard coinsurance (20%, after the deductible) on top of it. The vast majority of physicians and infusion sites accept assignment on every Medicare claim, which is what makes the 80/20 math above a reliable estimate.

A non-participating provider who chooses not to accept assignment on a given claim can charge up to 15% more than the Medicare-approved amount (the "limiting charge") and may collect the full amount from the patient up front, leaving the patient to file for Medicare's reimbursement directly. This is uncommon for routine infusion or injection services but worth confirming before treatment at an unfamiliar site of care.

Worked example

See a live version of this math with real drug pricing on the Remicade cost page and the Keytruda cost page, including the full Medigap plan-by-plan table for each drug's actual dose and dollar amounts.

Frequently asked questions

How does Medicare Part B split a drug's cost between Medicare and the patient?

Once the annual Part B deductible is met, Medicare pays 80% of the allowed amount for a provider-administered drug and its administration, and the patient owes the remaining 20% coinsurance. The allowed amount for most Part B drugs is set at ASP+6% — the drug's average sales price plus a 6% add-on that CMS recalculates every calendar quarter.

What is the Medicare Part B annual deductible and how does it apply to a drug claim?

The Part B deductible is a fixed dollar amount ($283 in 2026) that a patient owes toward Part B-covered services before Medicare starts paying its 80% share for the year. It resets every January 1 and applies across all Part B services combined, not per drug — a patient who has already met it from an earlier office visit or lab claim owes nothing further toward it. Only Medigap Plans C and F (grandfathered, not sold to people newly eligible after January 1, 2020) cover this deductible; every other standardized plan leaves the patient responsible for the full amount.

Which Medigap plans cover the Part B coinsurance?

Plans A, B, C, D, F, G, M and N all cover 100% of the Part B coinsurance (Plan N carves out a copay of up to $20 for an office visit and up to $50 for an ER visit that doesn't result in admission). Plan K covers 50% of the coinsurance and Plan L covers 75%, both up to an annual out-of-pocket maximum ($8,000 for K, $4,000 for L in 2026) after which they cover 100% like the other plans.

Does the 2% Medicare sequester increase what the patient owes?

No. The 2% sequester cut applies only to Medicare's 80% payment to the provider — it reduces the effective drug rate from ASP+6% to roughly ASP+4.3% on the portion Medicare pays. The patient's 20% coinsurance is calculated on the full, un-sequestered allowed amount and is not reduced or increased by the sequester.

What does it mean for a provider to accept Medicare assignment?

A provider who accepts assignment agrees to be paid Medicare's allowed amount as payment in full and bills the patient only the standard 20% coinsurance (after the deductible). A non-participating provider who doesn't accept assignment on a specific claim can charge up to 15% more than the Medicare-approved amount (the "limiting charge") and may require the patient to pay the full charge up front, then seek reimbursement from Medicare directly — almost all physicians accept assignment for Part B drug claims, but it is worth confirming for an unfamiliar site of care.

Is there an annual out-of-pocket maximum on Original Medicare Part B?

No. Original Medicare Part B has no annual out-of-pocket maximum, so the 20% coinsurance applies to every covered service for the rest of the calendar year unless a Medigap policy, Medicare Advantage secondary plan, Medicaid, or a diagnosis-matched foundation fund picks up the coinsurance. This is the specific gap that standardized Medigap plans and foundation funds exist to close for patients on expensive infused or injected drugs.

Related references

Sources

• CMS ASP Pricing Files, updated quarterly — source of the ASP+6% payment limit used throughout this page.
• CMS Medicare Claims Processing Manual, Pub 100-04, Chapter 17 — Drugs and Biologicals, incident-to and Part B drug payment rules.
• Medicare.gov — current-year Part B deductible and coinsurance figures.
• Medicare Rights Center, current-year Medigap plan benefits chart — source for the Plan A–N coverage table.
• CMS guidance on the Medicare sequester (Budget Control Act of 2011) — basis for the 2% payment reduction described above.
• CMS guidance on Medicare assignment and the limiting charge for non-participating providers.

All sources are publicly available federal publications or consumer guidance. The methodology by which we resolve source disagreements is described in the Methodology.