If you need cataract surgery, a shoulder replacement, or a hospital stay, you may wonder how much you could pay during the year.
A Medicare Advantage plan’s medical out-of-pocket maximum provides important financial protection. But it does not put a ceiling on every healthcare expense.
Here’s how the limit works—and what to look for when comparing plans.
What Is an Out-of-Pocket Maximum?
A Medicare Advantage plan’s medical out-of-pocket maximum is the annual limit on your share of costs for covered Medicare Part A and Part B services, subject to the plan’s rules.
Once you reach the applicable limit, you pay nothing more for covered medical services subject to that limit for the rest of the calendar year.
The limit resets January 1.
Each plan sets its own maximum, so two plans with similar monthly premiums can provide different levels of financial protection.
What Counts Toward the Medical Limit?
Eligible medical deductibles, copays, and coinsurance generally count. These can include your share of costs for:
Primary care and specialist visits
Covered cataract surgery
Covered shoulder or hip replacement
Inpatient hospital care
Outpatient surgery
Covered physical therapy
Covered diagnostic tests and imaging
A medical deductible counts toward the limit when it applies to eligible covered services. It is not an additional amount you pay above the maximum.
For example, if your plan has a $300 medical deductible and a $4,000 medical out-of-pocket maximum, that deductible is included within the $4,000.
A Practical Example: Cataract and Shoulder Surgery
Suppose your plan has a $4,000 in-network medical out-of-pocket maximum.
During the year, you pay:
Cataract surgery: $250
Shoulder surgery and related hospital care: $900
Doctor visits: $150
Physical therapy: $200
Your eligible medical spending so far is $1,500. You have $2,500 remaining before reaching the limit.
Later, you need additional covered medical care that would ordinarily require $3,000 in eligible cost sharing.
You would pay $2,500 of that amount, bringing your annual total to $4,000. The plan’s limit protects you from the remaining $500.
For the rest of that calendar year, you would owe no additional cost sharing for covered in-network medical services subject to that limit.
These amounts are examples only. They are not quotes for any particular plan or procedure.
What Does Not Count Toward the Medical Limit?
Several expenses remain separate, including:
Your Medicare Part B premium
Any Medicare Advantage plan premium
Part D prescription drug costs
Routine supplemental dental, vision, and hearing expenses, generally
Services the plan does not cover
Optional upgrades that are not covered
Part D prescription coverage has its own annual out-of-pocket protection and rules. Reaching your medical maximum does not mean you have reached your prescription drug limit.
Routine dental coverage also has separate benefit rules. A dental allowance or annual dental benefit maximum is different from your medical out-of-pocket maximum.
Can Your Total Spending Exceed the Medical Maximum?
Yes. The medical maximum limits eligible medical cost sharing—not your total spending on everything related to healthcare.
Consider this hypothetical example:
Eligible medical costs: $4,000
Your share of routine dental care: $1,500
Covered Part D prescription costs: $400
Annual Medicare Advantage plan premiums: $240
Total: $6,140
Your Medicare Part B premium and any other excluded expenses would be additional.
This is why it helps to compare the whole picture when choosing coverage.
Is Everything Covered at 100% After You Reach the Limit?
After you reach the applicable medical limit, the plan pays 100% of covered medical costs subject to that limit for the rest of the calendar year.
However, coverage requirements still apply. You may still need to use network providers, obtain prior authorization, and follow the plan’s other rules.
For example, reaching an HMO’s medical maximum does not automatically make a planned procedure with an out-of-network doctor covered.
PPO plans may have separate in-network and combined in-network/out-of-network limits. Reaching the in-network limit does not necessarily eliminate your share of out-of-network costs.
Premiums, separate prescription costs, and excluded expenses can also continue.
How Should You Compare Plans?
Look at both the care you expect to use and the financial protection you would have during a more expensive year.
Compare:
Monthly plan premiums
Medical deductibles
Doctor and specialist copays
Surgery and hospital charges
Prescription drug costs
Dental benefits
Medical out-of-pocket maximums
Provider networks and coverage requirements
A lower medical maximum can provide valuable protection. But the best fit also depends on your doctors, prescriptions, and likely use of care.
At My Medicare Universe, we help people in Arizona, New Mexico, and California understand these differences and compare Medicare options based on their individual needs.
Have questions about your coverage? Visit www.mymedicareuniverse.com to request a plan review.
This article is educational. Examples are illustrations, not quotes or guarantees of benefits or costs. Benefits and cost sharing vary by plan and year. Review the plan’s Summary of Benefits and Evidence of Coverage for complete details.
Medicare Advantage Out-of-Pocket Maximums: What Counts—and What Doesn’t?