Original Medicare Part A and Part B is the government program which provides those who are over 65 or on Social Security Disability with medical insurance coverage. While this program is fairly comprehensive in its medical coverage, one serious lack is an out-of-pocket limit for the medical expenses someone could be liable for.
In order to help manage or limit the medical expense liability someone could face, two programs were created to work with Medicare. Those two options are Medigap Plans, and Part C, Medicare Advantage Plans.
A Medicare Advantage plan is private health insurance that replaces Medicare and offers medical services within a managed care system. It has to offer at least what Medicare Part A and Part B offer, and it has one important extra feature – a maximum out-of-pocket limit.
We don’t usually have out-of-pocket limits in our everyday lives and the concept of a safety net can be foreign to many. A common misconception is that the out-of-pocket limit is a deductible.
Similar to Medicare, a Medicare Advantage plan makes you pay for part of the costs of the Medicare-covered services you’re receiving. Unlike Medicare, however, the Advantage plans place a limit on the most you will have to pay in any given year and this is called the out-of-pocket limit.
Medicare Advantage plans could have different out-of-pocket limits. The highest limit is $6,700, however, a PPO, which allows you to use out-of-network services, could have a higher limit.
Some of the costs that count towards that limit include:
- Primary care or specialist physician copayments
- Emergency room or urgent care copayments
- Coinsurance for diagnostic services, labs and imaging
- Skilled nursing facility and rehabilitation services copays
- Ambulance copayments
- Outpatient hospital visit or ambulatory surgical center visit copayments
- Inpatient hospital stay deductible and/or per day copayments
It is important to remember that your monthly premiums do not count. Also, prescription drug deductibles and copayments do not count towards the health plan’s medical out-of-pocket maximum.
When considering whether to get a Medicare Advantage plan, it’s important to consider not only the monthly premium you may be paying, but also the additional medical expenses you could be responsible for paying (out-of-pocket limit), should you get ill or injured.