Understanding Medicare's out-of-pocket costs

Don’t be frightened by the numbers. You have options.

One of the first things you probably want to know when considering a Medicare plan is what it covers. That makes perfect sense, but it’s important to know what Medicare doesn’t cover, as well. Those numbers can add up.

For example, you might be surprised to learn that Original Medicare offers limited coverage for most dental, vision and hearing services. So if a dental visit for a toothache turns into a $1,000 bill for a root canal, you’ll pay that out of pocket.

And the next time you really can’t find your glasses? Yep, you’ll be paying out-of-pocket for a new pair.

Add to that out-of-pocket costs for plan copays, deductibles and monthly premiums and you might start feeling the pinch. And that’s if you’re generally healthy.

An unexpected illness or injury requiring a hospital stay can send those numbers through the roof.

Here’s a helpful snapshot of your choices

Original Medicare Part A and Part B for 2019
Part A premium People who’ve worked for 10 years or more, and had Social Security taxes withheld, generally don’t have to pay a premium for Part A. Part A deductible and coinsurance1
  • $1,364 deductible for each benefit period*
  • Days 1–60: $0 coinsurance for each benefit period
  • Days 61–90: $341 coinsurance per day of each benefit period
  • Days 91 and beyond: $682 coinsurance per each "lifetime reserve day" for each benefit period (up to 60 days over your lifetime)
  • Beyond lifetime reserve days: all costs
Part B premium1 The standard Part B monthly premium amount in 2019 is $135.50 Part B deductible and coinsurance1 In 2019, the annual deductible for Part B coverage is $185 per year, after which you typically pay 20% of the Medicare-approved amount for most doctor services, outpatient therapy, and durable medical equipment (DME) Annual maximum out-of-pocket costs There is no maximum out-of-pocket limit with Original Medicare
Optional Medicare Part D and Medicare Supplement plans
Part D premium (prescription drug plan)

Part D premiums, deductibles and copays vary by plan

See costs for our Medicare prescription drug plans

Medicare Supplement insurance

There is a monthly premium for these plans. Medicare Supplement plans help pay some of the healthcare costs that Original Medicare doesn't cover, like copayments, coinsurance, and deductibles. They generally don't cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing. See costs for our Medicare Supplemental plans

Optional supplemental benefits: vision, dental and fitness

There is a monthly premium for these plans.

See costs for Humana’s optional supplemental benefits

Medicare Advantage (offered by private insurers like Humana)
Part C premium

Part C premiums, deductibles and copays vary by plan.

Compare costs for Humana’s Medicare Advantage (Part C) plans.

Annual maximum out-of-pocket costs

All Medicare Advantage plans offer an annual maximum out-of-pocket limit.

*A benefit period begins the day you're admitted as an inpatient in a hospital or skilled nursing facility (SNF). The benefit period ends when you haven't gotten any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a SNF after 1 benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible for each benefit period. There's no limit to the number of benefit periods. Having to spend time in the hospital several times over the course of a single year can also increase these costs.

The security of an annual limit on out-of-pocket costs

One of the benefits of enrolling in a Medicare Advantage plan is that there are annual limits on your out-of-pocket spending.

Consider the alternative. Medicare’s website shares these average annual out-of-pocket cost estimates for Original Medicare members with chronic conditions or unexpected illnesses:2

  • The average annual out-of-pocket costs for a typical person with diabetes can reach $10,800
  • The average annual out-of-pocket costs for a typical person with congestive heart failure is over $12,000
  • The average annual out-of-pocket costs for a typical person who has a heart attack also exceeds $12,000

Imagine the security of having the Medicare Advantage annual maximum out-of-pocket limit working for you.

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 Medicare Supplemental insurance on average spent $8,115 a year out of pocket for healthcare.3

What could you do with that extra money?

Healthcare expenses will continue to increase and out-of-pocket spending today could take an even larger bite out of your retirement savings. Think about how the numbers we’ve shared here may play out in your retirement so you can choose your Medicare plan with confidence.

Sources

  1. “2019 Medicare Parts A & B Premiums and Deductibles,” https://www.cms.gov/newsroom/fact-sheets/2019-medicare-parts-b-premiums-and-deductibles, opens new window
  2. “Medicare Advantage premiums continue to decline while plan choices and benefits increase in 2019,” CMS.gov, last accessed April, 2019, cms.gov/newsroom/press-releases/medicare-advantage-premiums-continue-decline-while-plan-choices-and-benefits-increase-2019, opens new window
  3. “Out-of-Pocket Spending and Financial Burden Among Medicare Beneficiaries With Cancer,” Amol K. Narang, MD; Lauren Hersch Nicholas, PhD, MPP, JAMA Oncology, last accessed April 2019, communityoncology.org/wp-content/uploads/2016/11/Jama-Cancer-OOP-Cost-Study-2016.pdf, PDF opens new window

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