When covered by most types of medical insurance policies, there will be an out-of-pocket maximum stated in the plan. This is the total amount – inclusive of the coinsurance and deductible – that is the most that the insured will need to pay before the insurance will start to pay for 100 percent of the covered expenses during a policy period.
The out-of-pocket maximum is typically considered to be the largest amount that you are required to pay towards the cost of your care every year – and, once you have paid this amount, your plan will pay for the rest of your related costs.
The Cost of Medicare
Because Medicare is a health insurance policy of sorts, it too has a myriad of copayments, coinsurance, and deductibles that are required to be paid by its enrollees. In some cases, these can add up to be quite a lot.
For example, in 2014, the Medicare Part A hospital inpatient deductible per benefit period is $1,216, along with a per-day coinsurance amount of $304 for days 61 through 90. Therefore, considering even a moderate hospital stay, these out-of-pocket expenses can truly add up. And unfortunately, unlike some other types of insurance, Medicare has no maximum out-of-pocket limit for those who are enrolled in the Original Medicare program.
What is Original Medicare?
Medicare Parts A and B are oftentimes referred to as Original Medicare. This is the traditional fee-for-service health care plan that is offered by the federal government to those who are age 65 and over, as well as certain other qualifying individuals.
Medicare Part A is considered hospitalization coverage. This part of Original Medicare will pay for certain expenses that relate to hospital stays, as well as for some care in a skilled nursing facility, some home health care, and hospice care. In most cases, you will not be required to pay a premium for Medicare Part A, provided that you or your spouse paid taxes while you worked.
If you’re already getting benefits from Social Security or the Railroad Retirement Board, you will automatically get Medicare Part A beginning the first day of the month in which you turn age 65. If not, you will need to apply.
Medicare Part B provides coverage for doctors’ services. This part of Medicare covers expenses that relate to the services of doctor visits, as well as outpatient care, preventive services, and medical supplies. Most people pay a standard monthly premium for Medicare Part B.
It is important to note that while you don’t need to sign up or reapply for Medicare every year, you will have a chance to review your coverage, as well as an opportunity to change to a different plan if you so choose.
Factors Affecting Your Out-of-Pocket Costs
When you are enrolled in Original Medicare, there are a number of factors that can affect how much you will pay in out-of-pocket expenses each year. These may include the following:
Whether you have both Medicare Part A (Hospital Insurance) and Part B (Doctors’ Insurance)
The type of health care services that you require, as well as how often you need such health care services
Whether or not your doctor(s) and other health care provider(s) and supplier(s) accept Medicare assignment
Whether you and your doctor(s) and / or other health care provider(s) sign a private contract
Whether you choose to obtain health care services or supplies that Original Medicare does not cover (If so, then you will be required to pay all of these costs, unless you have another type of insurance that will cover them).
Whether or not you also have a Medicare Supplement insurance policy
Whether you have Medicaid coverage or another type of state financial aid
Whether you have other health insurance coverage that works in conjunction with your Original Medicare coverage
Curbing Medicare’s Out-of-pocket Costs
While the out-of-pocket costs can add up for those who are enrolled in Medicare, there is a way to help control these expenses by purchasing a Medicare Supplement policy. These plans can help to fill in the “gaps” in coverage where Medicare leaves off.
There are ten Medicare Supplement policies to choose from – so coverage can go from basic to comprehensive – depending on how much you want filled in. And, depending on when you enroll, you may not be turned down by the insurance company for health reasons.