What is the Out-of-Pocket Maximum for Medicare in 2023?

The out-of-pocket maximum for Medicare is the most you’ll have to pay for covered Part A and Part B services in a year. Once you hit this max, you’ll pay nothing for covered services for the rest of the year. Knowing your out-of-pocket max can help you budget for healthcare costs.

For 2023, here’s what you can expect to pay out-of-pocket if you have Original Medicare:

2023 Medicare Part A Out-of-Pocket Deductibles

With Part A Medicare Plan, which covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health services, your out-of-pocket costs include:

  • A deductible per benefit period: This is $1,600 in 2023 for each benefit period, which starts the day you’re admitted to a hospital or skilled nursing facility and ends when you haven’t received care as an inpatient at any hospital or SNF for 60 days in a row.
  • Coinsurance: You pay a portion of the costs for long hospital stays and skilled nursing facility care. For hospital stays beyond 60 days, you pay $400/day coinsurance in 2023. For days 21-100 in a SNF, you pay $200/day.

That’s it for Part A – there’s no annual out-of-pocket maximum. But there is a max limit on the total coinsurance you can pay, which is $3,200 in 2023.

Medicare Part B Premium and Out-of-Pocket Expenses

For Part B, which covers medically necessary services like doctor visits, diagnostic tests, durable medical equipment, and outpatient care, your out-of-pocket costs are:

  • A deductible: This is $ 226 in 2023. You pay 100% of costs until you reach this amount.
  • A monthly premium: According to centers for Medicare, the standard premium is $164.90/month in 2023 for most beneficiaries. Premiums are based on your income and may be higher.
  • Coinsurance: After your deductible, you typically pay 20% of the Medicare-approved amount for services. Some preventive services have 0% coinsurance.
  • The annual out-of-pocket maximum: This limits your total yearly costs for Part B services. In 2023, it’s $7,400.

If you have both Part A and Part B and only use providers who accept Medicare, your combined out-of-pocket max is $7,400. That factors in the Part B max and max coinsurance for Part A.

Some key things to know:

  • The Part B deductible and coinsurance count toward your out-of-pocket max. Your monthly premiums don’t count.
  • If your doctor does not accept Medicare assignment, they aren’t limited in what they can charge. Those excess charges don’t count toward your max out-of-pocket either. Always check if your healthcare providers accept assignment.
  • Even if you reach the out-of-pocket max, you’ll still need to pay your Part B premium.
  • Medications covered under Medicare Part D prescription drug don’t count toward the out-of-pocket max. Part D has its own limits.

Out-of-Pocket Limits with Medicare Advantage

If you have a Medicare Advantage Plan instead of Original Medicare, your out-of-pocket maximum works differently. Here are some key details:

  • Medicare Advantage Plans, sometimes called Part C, are offered by private insurers approved by Medicare. They bundle Part A, Part B, and usually Part D.
  • Plans must cap your in-network out-of-pocket drug and medical costs. In 2023, the max out-of-pocket is $8,300.
  • Your costs for Part A and Part B services will count toward this limit. That includes deductibles, copays, and coinsurance.
  • Monthly premiums don’t count toward the out-of-pocket cap.
  • Your plan’s max out-of-pocket may be lower than $8,300 – many plans have maximums of $4,000-$6,500.
  • Each plan can set its own cap, so check your plan’s specific limit.
  • Plans can also choose to set lower copays or coinsurance rates than Original Medicare for covered services.
  • If you see out-of-network providers, your Medicare Advantage Plan isn’t required to cap your out-of-pocket costs. Out-of-network charges likely won’t count toward your plan’s annual limit.
  • Costs for non-Medicare covered services like vision, dental, or hearing aids usually are not included in the out-of-pocket max either.

Medicare Premium Part D Out-of-Pocket Maximum

Medicare Part D helps cover prescription drug costs. Your costs for Part D are separate from your Medical out-of-pocket max. Here’s a look at the out-of-pocket costs for Part D coverage:

  • Monthly premiums: These vary by plan, with averages around $30-$50 per month. Premiums are based on your income – higher earners pay more.
  • Annual deductible: In 2023, it’s $505. You pay 100% of drug costs until reaching this deductible.
  • Copays or coinsurance: Once you meet your deductible, you pay either a flat copay or a coinsurance percentage for covered prescriptions. Plans group drugs into tiers, with higher costs for non-preferred brands.
  • Coverage gap: Almost all plans have a coverage gap phase where your out-of-pocket costs go up. In 2023, once your total drug spend hits $4,660, you enter the coverage gap.
  • Catastrophic coverage: After your out-of-pocket drug costs for the year hit $7,400, you qualify for catastrophic coverage with reduced costs.

In the catastrophic phase, you pay $4.15 for generics and $10.35 for brands, or 5% coinsurance, whichever is greater.

So if you have Original Medicare with Part D coverage, you’ll have two separate out-of-pocket maximums – one for medical costs under Parts A and B, and one for drug costs under Part D.

How Income Affects Your 2023 Medicare Costs

Your income level affects some of your Medicare out-of-pocket costs, specifically:

  • Part B premiums – If your income is above $97,000 as a single tax filer or $194,000 as a joint filer, you’ll pay an income-related monthly adjustment amount (IRMAA) in addition to your standard premium each month. IRMAA can add anywhere from $68.10 – $578.30 to your premium.
  • Part D premiums – Higher earners pay an income-related adjustment on their Part D premiums too. If you file individually and make over $97,000, you’ll pay an extra $12.20 to $77.90 per month. For joint filers making over $194,000, the additional amount is $24.40 to $155.80 per month.
  • Part B deductible – In 2023, higher income individuals also pay a larger deductible for Part B rather than the standard $226 deductible. The Part B deductible can go up to $329 for single filers earning $114,000-$142,000 and $658 for those making $342,000 or above.

Keep these income adjustments in mind as you budget for Medicare, as they can impact your out-of-pocket costs and caps.

Out-of-Pocket Costs for Other Types of Medicare Coverage

In addition to Original Medicare and Medicare Advantage, there are a few other types of Medicare coverage with their own maximum out-of-pocket costs:

  • Medicare Supplement (Medigap) Plans: These help cover Original Medicare out-of-pocket costs like coinsurance and deductibles. Premiums vary by plan. Medigap Plans have standardized benefit sets ↗, so out-of-pocket costs are typically lower overall vs. only having Original Medicare.
  • Medicare Medical Savings Accounts (MSAs): A type of Medicare Advantage Plan that pairs a high deductible with a medical savings account. Your deductible in 2023 is $4,950 or $7,400. The plan deposits money into your account to help cover medical costs pre-deductible.
  • Medicare Special Needs Plans (SNPs): Offered by private insurers for specific populations like people with chronic conditions. Out-of-pocket maxes can’t exceed $8,300 in 2023 for in-network services.

Medicare Cost Plans: Plans from private insurers that let you get services outside the plan’s network. Your out-of-pocket costs are generally higher when you use out-of-network providers. T

  • PACE (Program of All-Inclusive Care for the Elderly): Combines medical, social, and long-term care services for frail people 55 and older. There are no deductibles – you pay a monthly premium to the PACE organization. Copays vary based on your level of coverage under Medicare Parts A and B.

How to Estimate Your Medicare Out-of-Pocket Costs for 2023

Figuring out your potential maximum out-of-pocket limit costs for the year can take some legwork. Follow these steps for an estimate:

  1. Find out your plan’s out-of-pocket max for 2023. This limit can vary based on the type of Medicare coverage you have.
  2. Check if you’ll pay any income-related adjustments. Higher earners pay more for Parts B and D. Look up how much extra you’ll owe based on your last tax return.
  3. Add up your expected premium costs for the year. Account for your Part B premium, any Medigap or Part D premiums, and any surcharges.
  4. Estimate your expected healthcare usage. Do you see specialists regularly? Need lab tests or imaging? Expect hospital stays or procedures?
  5. Look up cost estimates for your care. Use Medicare published prices to estimate your share of coinsurance costs for services.
  6. Factor in deductibles 2023 you’ll need to pay first. Look up Part A deductibles for any expected hospital stays. Don’t forget the Part B and Part D deductibles too.
  7. Account for repeat costs. You’ll pay the Part B deductible just once, but premiums and other costs repeat monthly. Make sure to calculate costs accurately.
  8. See if you have secondary coverage. If you have retiree or Medicaid benefits too, some costs may be picked up by that additional coverage.
  9. Pay attention as you get care. Track bills and Medicare Summary Notices so you can see when you get close to hitting your out-of-pocket max.

With careful planning and cost tracking, you can estimate whether you’re likely to reach your Medicare out-of-pocket maximum in 2023. This can help you be prepared for healthcare costs in the upcoming year.

Reaching your max limit provides financial protection – once you hit your plan’s cap, your coverage kicks in to cover 100% of your remaining covered services. But out-of-pocket maximums still allow for significant healthcare spending.

Understanding Medicare costs ensures you can access the care you need without breaking the bank. Be sure to factor in premiums, deductibles, coinsurance and any surcharges to estimate your Medicare expenses for 2023 accurately.

We’re Here to Help

You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at American Entitlements a Call at (469) 814-0289. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.

FAQS

What are the basic parts of Medicare and what do they cover?

Medicare program has different parts that cover specific services. Medicare Part A covers hospital stays and skilled nursing facility care. Medicare Part B covers doctor visits, outpatient care, and preventive services. Medicare Part C (Medicare Advantage Plans) combines Part A, Part B, and usually Part D. Medicare Part D provides prescription drug coverage.

What are the Medicare premiums, deductibles, and out-of-pocket costs for 2023?

The standard monthly premium for 2023 Medicare Part B is $164.90, an increase from $170.10 in 2022. The Medicare Part B deductible is $226 in 2023, up from $203 in 2022. The Medicare Part A deductible for inpatient hospital stays is $1,600 in 2023. Medicare Advantage Plans may have different out-of-pocket limits in 2023. Overall, Medicare beneficiaries can expect to pay more in premiums, deductibles, and other out-of-pocket Medicare costs in 2023.

How are Medicare Part B premiums calculated?

Medicare Part B monthly premiums are calculated based on the projected costs of Part B coverage for people with Medicare. Higher income beneficiaries pay higher Part B premiums through a monthly adjustment. The standard Part B premium can also increase year-to-year based on program costs. The 2023 Part B premium is increasing from 2022 due to higher projected spending on Part B items and services covered by Medicare.

What does Medicare Part D cover and how do the costs work?

Medicare Part D prescription drug coverage plan. People with Medicare can get Part D through stand-alone plans or Medicare Advantage Plans that include drug coverage. Medicare Part D Plans have monthly premiums, deductibles, copays or coinsurance, and out-of-pocket limits. Higher income individuals pay more for Part D coverage through an income-related monthly adjustment amount in addition to their plan premium.

What are the out-of-pocket costs in Original Medicare versus Medicare Advantage?

Medicare beneficiaries in Original Medicare pay a premium for Part B coverage in addition to deductibles and coinsurance amounts for Medicare Part A and Part B services. Those in Medicare Advantage Plans in 2023 pay a monthly plan premium along with copays and deductibles set by their plan. However, Medicare Advantage Plans have an annual out-of-pocket limit, while Original Medicare does not. This makes the overall costs more predictable in Medicare Advantage Plans.

What does Medicare Supplement insurance cover?

Medicare Supplement insurance, also called Medigap, helps cover Original Medicare out-of-pocket costs like deductibles and coinsurance. These private insurance policies fill in Medicare coverage gaps and help limit unexpected medical expenses. Medicare Supplement Plans do not cover prescription drugs. Costs vary by plan.

What are some ways Medicare beneficiaries can reduce their healthcare costs in 2023?

Comparing basic Medicare coverage options during open enrollment and choosing cost-effective plans can help lower out-of-pocket expenses. Using in-network providers, asking about discounts if uninsured, getting preventive care, and utilizing telehealth services also help reduce Medicare spending for beneficiaries. Comparing Part D Plans annually and applying for financial assistance programs like Extra Help can lower prescription drug costs.

How have Medicare premiums, deductibles, and coinsurance amounts changed from 2022 to 2023?

The standard monthly premium for Medicare Part B increased by $7.20 per month from 2022 to 2023. The annual deductible for Part B also increased by $23 for 2023. Medicare Part A deductibles and coinsurance for hospital stays increased minimally from 2022. Overall, Medicare beneficiaries are facing higher premiums, deductibles, and other out-of-pocket costs for their Medicare coverage in 2023 compared to 2022.

Are Medicare costs expected to continue rising beyond 2023?

Yes, Medicare deductibles or costs for beneficiaries are generally expected to rise in coming years. Projected increases in healthcare costs combined with more Medicare beneficiaries.

What resources are available to help Medicare beneficiaries with costs?

Beneficiaries with limited income and resources may qualify for assistance programs like Medicaid services, Medicare Savings Programs, and Extra Help for Part D.

Request a No Obligation Phone Call