At the beginning of each calendar year, there is a deductible that must be paid out of pocket before Medicare begins to pay for covered services and supplies. During 2009 the deductible is $135. This means that whatever Part B service is used first, the first $135 spent will not be paid by Medicare, and will be paid by the individual.

This first service may be a doctor's visit, medical supplies, or a variety of other covered Medicare Part B services or supplies. After the deductible is met, Medicare pays 80% of the approved charge. The individual is responsible for the other 20%, if the provider agrees to accept Medicare payments. This 20% that the individual is responsible for is called coinsurance.

If a Medicare B provider does not accept assignment with Medicare, then the individual will pay the full price up front. The provider will then file a claim on your behalf with Medicare. Medicare will process the claim, and if the claim is approved, a check covering a portion of the expenses is sent back to the individual. Note that certain important Part B benefits (such as flu shots) do not go towards the deductible, and Medicare pays 100% instead of 80% of the covered service.