What to know about Medicare's out-of-pocket costs

Three senior citizens stretch their arms upward while taking part in a chair yoga class.

You might be surprised to learn that Original Medicare offers limited coverage for most dental care, vision and hearing services.

You could also end up paying out of pocket to cover coinsurance, deductibles and monthly premiums. Having to spend time in the hospital several times over the course of a single year can also increase these costs.

If Original Medicare doesn’t meet all of your healthcare needs, you have another option—Medicare Advantage.

Medicare Advantage may provide additional coverage for services that Original Medicare offers limited coverage for, such as dental care, vision care and hearing aids, as well as doctor and hospital care.1 Medicare Advantage plans may also help you reduce your out-of-pocket expenses for healthcare.

Medicare Advantage plans have been growing in popularity in recent years. The Centers for Medicare & Medicaid Services states: "enrollment is projected to increase to 18.5 million enrollees next year, a 60% increase from 2010. In 2017, 32% of all Medicare enrollees will be in a Medicare Advantage plan compared to only 24% in 2010."2

Putting a cap on what you have to pay

One of the benefits of enrolling in a Medicare Advantage plan is that there are limits on out-of-pocket spending each year. That amount varies from plan to plan, and can change each year.3 Estimating how much you're going to have to spend out of pocket in the coming year can be difficult.

You can't always predict all of your future health needs. Knowing that there's an upper limit to how much you'll have to spend may better help you budget your expenses in retirement.

A Journal of the American Medical Association Oncology study published in 2016 looked at the out-of-pocket costs Medicare beneficiaries diagnosed with cancer between 2002 and 2012 spent. The study found that those in a Medicare Advantage health maintenance organization (HMO) plan on average spent $5,976 a year out of pocket for healthcare.

Those with traditional Medicare and no supplemental Medigap insurance on average spent $8,115 a year out of pocket for healthcare. Almost 10% of elderly patients with Medicare alone spent more than 60% of their annual household income on out-of-pocket healthcare expenses after they were diagnosed with cancer, the study found.4

Medicare’s website shares estimates for out-of-pocket costs for people in good health, averaging $7,620 per year. The average annual estimates for people with high-cost chronic conditions and unexpected illnesses increase:

  • A typical person with diabetes might expect to spend $10,200 per year in out-of-pocket expenses
  • Someone with congestive heart failure might expect to pay $11,400 out of pocket annually
  • Someone who suffers a heart attack might expect to pay $12,012 per year out of pocket5

Healthcare expenses will continue to increase and out-of-pocket spending today could take an even larger bite out of your retirement savings. That's why it's so important to do your homework about your Medicare coverage options.

See plans in your area

Enter your ZIP code below to see plans with their premiums, copays, and participating doctors and pharmacies

Call a licensed Humana sales agent

1 - 888 - 204 - 4062 (TTY: 711)

Humana answers your Medicare questions