If you are a Medicare beneficiary, your Medicare plan covers most of your medical expenses for covered services. However, you are also required to cost share in the expenses by paying deductibles, copayments, and coinsurance fees. These out-of-pocket costs can vary depending on your Medicare plan.

What is the maximum out-of-pocket for Medicare?

Medicare does not have a maximum out-of-pocket limit unless you are on a Medicare Advantage plan or have a Medigap plan.

This means that if you are on Original Medicare, your costs are not capped and how much you pay will depend on the type of Medicare services, how often you need them, and the providers you use. Beneficiaries who require frequent medical attention might find themselves paying thousands of dollars in out-of-pocket costs, while seniors who are generally more healthy might barely have any spending at all.

Medicare Part A out-of-pocket maximum

As a part of Original Medicare, Part A (hospital insurance) does not have an out-of-pocket cap. In most cases, you will not be required to pay premiums for Medicare Part A, but other costs apply, including:

·        Deductible: The deductible is the amount you pay before your Part A benefits start covering your medical expenses. The 2024 deductible for Medicare Part A is $1,632 per benefit period.

·        Copayments: copays are the fixed amounts that you need to pay for a Medicare-approved service or product. For instance, for inpatient hospital stays, your copays under Medicare Part A will be $0 for days 1-60, $408 for days 61-90, and $816 for days 91-150. After day 150, you cover all the costs yourself.

Medicare Part B out-of-pocket maximum

Your expenses for outpatient services like doctor’s visits and diagnostic tests are covered under Part B benefits.

Just like Medicare Part A, there is no out-of-pocket maximum for Part B benefits. This means your out-of-pocket costs will depend on how much you use Medicare services.

Some of the costs you will incur under your Plan B benefits include:

·        Monthly premium: Medicare Part B incurs a monthly premium that you are required to pay for your benefits to take effect. Part B monthly premiums start from $174.70, but this can vary depending on your income.

·        Deductible: You are required to pay a $240 deductible yearly to receive your Part B benefits.

·        Coinsurance: Under Part B benefits, you will need to meet 20% of the Medicare-approved amount for most services. However, some services like covered clinical laboratory tests may not have coinsurance costs.

Medicare Part C (Medicare Advantage) out-of-pocket maximums

Medicare Part C or Medicare Advantage plans include your Part A and Part B benefits and may also include other coverages not offered under an Original Medicare Plan.

Since Medicare Advantage plans are offered by private companies, premiums, deductibles, and coinsurance costs can vary depending on your provider and plan type. However, all Medicare Advantage plans are required to adhere to a maximum out-of-pocket limit set by Medicare.

In 2024, the in-network maximum can be as high as $8,850 and the combined in and out-of-network maximum will usually be higher, up to $13,300.

Some Medicare Advantage plans will have different maximum out-of-pocket limits for in-network services and out-of-network services.

What counts as out-of-pocket maximum for Medicare Advantage?

If you have a Medicare Advantage plan, keep in mind that your monthly premium is not included in your out-of-pocket maximums.

The out-of-pocket costs that will be counted as part of your out-of-pocket maximum for Medicare Advantage include:

·        Deductibles;

·        Copayments;

·        Coinsurance;

Medicare Part D out-of-pocket maximum

Medicare Part D is an optional plan that you can purchase to cover prescription drug costs. Each Part D Plan has a formulary or list of drugs that are covered. Medicare Part D plans incur a monthly premium that may vary depending on your income.

Medicare Part D does not have a maximum limit for out-of-pocket costs. The out-of-pocket costs you will incur under Medicare Part D include:

·        Annual deductible. Part D coverage requires payment of an annual deductible (545 in 2024) for benefits to kick in.

·        Coinsurance and copayments. These are the amounts you are required to pay as your share of the cost of prescription drugs. These amounts will vary depending on the tier level of the prescription drug.

·        Coverage gap. This gap or temporary limit in your plan D coverage applies after your prescription coverage has exceeded a set limit for the year ($5,030 in 2024).  After this limit, your plan will only pay 5% for approved drugs, your share will be 25%, and the manufacturer will cover 70%.

·        Catastrophic coverage: Once you’ve spent a specific amount out of pocket ($8,000 in 2024), you will be out of the coverage gap and qualify for catastrophic coverage, which will cover the rest of your prescription drugs save for coinsurance or copayment fees.

Help with Medicare out-of-pocket costs

If you are on Original Medicare, there is no limit on your out-of-pocket costs. This means that you can incur high out-of-pocket costs, especially if you require frequent healthcare services. The lack of a maximum out-of-pocket in Original Medicare is the reason why beneficiaries should consider either getting a Medigap plan to supplement Original Medicare or switching to a Medicare Advantage to keep out-of-pocket costs manageable.

Plans that can help you reduce your Medicare out-of-pocket costs include:

Medigap

Medigap plans are Medicare supplement plans that are offered by private insurers to help cover Medicare out-of-pocket costs. You can only purchase a Medigap plan if you have Original Medicare, so those on Medicare Advantage plans are not eligible.

Some of the out-of-pocket costs covered by Medigap include:

·        Deductibles;

·        Copayments;

·        Coinsurance;

Medicare Savings Accounts (MSAs)

Medicare Savings Accounts (MSAs) are savings accounts that you can use to cover your Medicare out-of-pocket costs. These accounts are funded by Medicare and sold by private insurers to allow you to cover some of the Medicare costs like deductibles that you would need to pay for out of pocket.

Questions about Medicare?

Shoot us an email at medicare@hihella.com.

Article updated on October 27, 2023.