MAXIMUM OUT-OF-POCKET EXPENSES Flashcards
Explain maximum out-of-pocket expenses in the context of Medicare Advantage and what expenses are included and what are not.
In the context of Medicare Advantage (also known as Medicare Part C), the “maximum out-of-pocket” expense refers to the most you would have to pay for covered services within a calendar year. Once you reach this limit, the Medicare Advantage plan will cover 100% of your approved Medicare healthcare costs for the remainder of the year.
The maximum out-of-pocket limit for Medicare Advantage plans in 2024 is $8,850 for in-network services. However, the average limit for Medicare Advantage plans in 2023 was $4,835 for in-network expenses and $8,659 for combined in-network and out-of-network expenses.
Expenses that are typically included in the maximum out-of-pocket limit for Medicare Advantage plans are:
-Doctors’ visits
-Emergency room visits
-Hospital stays
-Outpatient services
-Durable medical equipment
-Skilled nursing facilities
-Home health care
However, there are certain expenses that do not count toward the maximum out-of-pocket limit:
-Monthly premiums
-Balance billing charges for non-network providers
-Out-of-network services
-Elective or cosmetic services
-Any money spent on non-essential health benefits
-Adult dental or vision care, as most healthcare plans do not cover these services
-Costs for Part D drugs or for supplemental benefits like dental or hearing
It’s important to note that the specifics can vary from plan to plan, so it’s always a good idea to check the details of any individual plan.
In the context of Original Medicare, which includes Part A and Part B, there is no limit on what you may pay in cost sharing123. This means that there is no maximum out-of-pocket limit for Original Medicare.
Your out-of-pocket expenses for Original Medicare Part A and Part B typically include:
Deductible: The amount you must pay each year for covered health services before your insurance kicks in.
Copayment: A fixed amount you pay for a service once you’ve met your deductible.
Coinsurance: A percentage of the cost of a service you pay once you’ve met your deductible.
These out-of-pocket expenses typically do not include your monthly premiums or the cost of services that insurance doesn’t cover.
For Medicare Part A, you can expect to pay:
A $1,600 deductible for each benefit period you’re hospitalized in 2023 or $1,632 in 2024.
A portion of hospital costs if you stay more than 60 days: $400 a day for days 61 to 90, and an $800 daily copay after day 90 for up to 60 lifetime reserve days in 2023. Those numbers rise to $408 and $816, respectively, in 2024. You’re responsible for all costs if you use up your lifetime reserve days.
A $200 daily copay if you stay in a skilled nursing facility for 21 to 100 days in 2023; $204 in 2024. You’re responsible for all costs beyond day 100.
For Medicare Part B, you can expect to pay:
A $226 deductible in 2023; $240 in 2024.
A 20 percent coinsurance to cover most Part B services. However, many preventive services have no cost sharing.
Please note that many people buy a Medicare supplement policy, also known as Medigap, that can cover most of these expenses. Other parts of Medicare, such as Medicare Advantage plans that you purchase through private insurers, do have out-of-pocket spending limits.
In the context of Medicare Advantage (Part C), the expenses that are included and credited towards the Maximum Out-of-Pocket (MOOP) limit typically include the costs you pay for in-network services.
These costs generally include:
Deductibles: The amount you must pay each year for covered health services before your insurance begins to pay.
Copayments: A fixed amount you pay for a covered health service after you’ve paid your deductible.
Coinsurance: Your share of the costs of a covered health service, calculated as a percent of the allowed amount for the service, that you pay once you’ve met your deductible.
The MOOP limit for Medicare Advantage plans varies, but federal law requires it to be $8,300 or less for covered in-network services in 2023, and $8,850 or less in 20241. For combined in-network and out-of-network services, the limit is $12,450 or less in 2023, and $13,300 or less in 2024.
In the context of Medicare Advantage, are there any expenses made out-of-network that contribute to. or count toward, the Maximum out-of-pocket expenses?
In the context of Medicare Advantage, the out-of-network expenses that contribute to the Maximum Out-of-Pocket (MOOP) limit can vary depending on the type of Medicare Advantage Plan
For HMO (Health Maintenance Organization) plans, typically only emergency care, urgent care, and dialysis services received out-of-network count towards the MOOP.
For PPO (Preferred Provider Organization) plans, both in-network and out-of-network services count towards the MOOP. However, out-of-network services usually have higher cost-sharing, and the MOOP for out-of-network services is also higher.
It’s important to note that any expense you incur that does not receive Medicare coverage does not apply towards your maximum out-of-pocket. This includes Medicare prescription drug costs and monthly premiums.
Please remember to carefully review your plan’s out-of-pocket costs and understand the limitations of the coverage before enrolling. It’s always a good idea to consult with a healthcare advisor or the plan provider to understand the specifics of your plan.
Are Medicare prescription drug costs and/or monthly premiums ever included toward the Maximum out-of-pocket expenses, in either Original Medicare or Medicare Advantage?
In both Original Medicare and Medicare Advantage, monthly premiums and Medicare prescription drug costs typically do not count towards the Maximum Out-of-Pocket (MOOP) limit.
For Original Medicare (Part A and Part B), there is no MOOP limit. Your out-of-pocket expenses typically include deductibles, copayments, and coinsurance, but not your monthly premiums or the cost of services that insurance doesn’t cover.
For Medicare Advantage (Part C), the MOOP limit typically includes the costs you pay for in-network services, such as deductibles, copayments, and coinsurance. However, it generally does not include your monthly premiums or the cost of services that insurance doesn’t cover.
Regarding Medicare prescription drug costs (Part D), these costs do not count towards the MOOP limit in either Original Medicare or Medicare Advantage. Medicare Part D plans do not set a maximum out-of-pocket limit. Once you reach the catastrophic coverage phase of your drug plan, you are still responsible for up to 5% of your prescription drug costs. However, in 2025 the Medicare Part D maximum out-of-pocket limit will be $2,000.
Do Medicare Part D plan have Maximum out-of-pocket expenses?
Yes, Medicare Part D plans do have a Maximum Out-of-Pocket (MOOP) limit, also known as the True Out-of-Pocket (TrOOP) limit. This is the maximum amount an individual enrolled in Medicare Part D can spend on covered drugs out-of-pocket before entering catastrophic coverage, where cost-sharing is reduced.
The TrOOP limit for Medicare Part D in 2023 is $7,050. However, the out-of-pocket maximum for Part D Plans will drop from $7,400 in 2023 to $3,725 in 2024 as a result of the Inflation Reduction Act provisions.
Starting in 2025, your yearly Part D out-of-pocket costs will be capped at $2,000. This means that once you reach this limit, you will enter the catastrophic coverage phase of your drug plan, where you are still responsible for up to 5% of your prescription drug costs.
