Recently, my mom fell and broke both her wrists. Between the trip to the ER, X-rays and follow-up visits, the cost of her health care really added up. Thankfully, her Medicare plan had a medical out-of-pocket maximum that limits the amount she has to spend each year.
Once she hits her out-of-pocket maximum, her plan covers all the costs for her medical care. She’s financially protected, even if she has another unexpected or expensive health care need. That’s why an out-of-pocket maximum is so important for people with a Medicare plan, especially those living on a fixed income.
As a Member Services rep at HealthPartners, it’s my job to help people understand how much they might need to pay for their care. So when people call to ask about the cost of a medical service or visit, I start by checking their out-of-pocket maximum.
What is an out-of-pocket maximum?
This is the limit on how much you might pay for medical care through copays and coinsurance in a year. Some people never get enough health care to hit their out-of-pocket maximum.
Think of your out-of-pocket maximum like a bucket. Every time you spend your own money on medical services or care, it goes into the bucket. Once the bucket is full, you’ve hit your out-of-pocket maximum. After that, your Medicare health plan will cover the cost of any Medicare-covered doctor visits or medical services you need.
For example: William needs a surgery that costs $10,000. His plan’s medical out-of-pocket maximum is $4,000. He’s already spent $3,000 on medical care. Even if William’s coinsurance for surgeries is 20 percent (meaning he’d normally have to pay $2,000 for the $10,000 surgery), he would only have to pay $1,000 in this case. That’s because his out-of-pocket maximum kicks in after he pays $4,000 (and that $3,000 he spent earlier in the year counts toward this number).
And if he needs additional care through the end of his plan year, his health plan will generally cover the cost for that as well. William won’t need to pay any more copays or coinsurance.
Here are some things to keep in mind:
- Original Medicare doesn’t have an out-of-pocket maximum. Medicare Advantage plans do. And the out-of-pocket maximum is different between plans. If you’re shopping for a Medicare Advantage plan, be sure you choose one with an out-of-pocket maximum that fits your budget.
- Your out-of-pocket max doesn’t include the cost of your meds.Money you spend on most prescriptions won’t count toward your out-of-pocket maximum.
- Your out-of-pocket max doesn’t include the cost of your monthly premium or Part B premium.
- Some plans may have separate in-network maximums and out-of-network maximums. Out-of-network maximums are usually higher. With some Medicare plans, your out-of-network costs count toward your in-network maximum. That means you’re making progress toward hitting your in-network out-of-pocket max, even if you go to an out-of-network health care provider. Check with your member services team to see if this is the case with your plan.
At the end of the day, your plan’s out-of-pocket maximum is meant to bring you peace of mind. So even if something unexpected happens – like my mom’s accident – you’ll know the worst-case amount you’ll have to pay each year for your health care needs. And that makes it a lot easier to plan your budget.