The Out-of-Pocket Limit for Medicare Advantage Plans

Medicare Insurance plans are designed to cover the expenses of a variety of medical services. There are a variety of plans that you can choose from and get the coverage that you need. The primary and the most important plan is known as Original Medicare. This plan is divided in two parts – Part A and Part B. Although it covers hospitals and medical care, there are some gaps in coverage, and enrollees can expect out-of-pocket costs for some treatments.

The alternative to Original Medicare is called Medicare Advantage. The Advantage plan pays for more, including some services that are not covered by the original Medicare. Some of the most prominent services are dental, vision and hearing, which are the major reasons why people choose Advantage over Parts A and B.

According to the Kaiser Family Foundation, Medicare beneficiaries spent $5,460 on medical expenses in 2016. This number marks the out-of-pocket cost i.e. everything that isn’t covered by insurance. However, this is for the Medicare beneficiaries who were enrolled in the Original Medicare only.

There was no such research done for the recipients of the Medicare Advantage insurance because rates for out-of-pocket costs varied greatly between individuals.

However, there is some insight into how much Advantage beneficiaries spent. A study conducted by the Journal of the American Medical Association Oncology showed that people with cancer who had Advantage health maintenance organization (HMO) plans spent on average $5,976 for health care in 2016.

Medicare Advantage Premium


Medicare beneficiaries must cover Part B medical insurance premium. This is no different for those who opt for Medicare Advantage, because they too must pay premiums. The monthly cost will largely depend on the plan you select and the type of the plan.

Below, we will list some of the major Advantage type and their main characteristics and rates:

Medicare Advantage HMO

Medicare Advantage Health Maintenance Organization or HMO requires you to select your Primary Care Provider or PCP and you will need to get referrals to see specialists. This is a popular Advantage plan because of the number of things it includes. HMO has lower premiums than some other plans that we will mention here. Usually, Medicare Advantage monthly rates are lower than the rates associated with the traditional private insurance. For instance, in 2019, the average Advantage beneficiary paid $29 per month.

Medicare Advantage PPO


Medicare Advantage preferred provider organization or PPO is the second plan we will mention here. Unlike the HMO, you are not required to select PCPs and you don’t need referrals for specialists. However, enrollees will need to find the provider which is included in the preferred provider’s network. Going outside the network means extra costs in most instances, excluding some emergencies.

This type of insurance is a bit unforgiving for the out-of-pocket costs, especially if you leave your network. In those cases, you will need to pay much more than you would with any other plan.

The other two Medicare plans that you could consider are PFFS and SNP, but they are more specific and you should ask your Medicare insurance provider for more details. If you are an eligible recipient or are helping a loved one, you can learn more about Medicare Advantage Plans at:

The pricing for Medicare Advantage is released at the end of the year before the annual Medicare Open Enrollment when everyone has a chance to select the plan they want to enroll in. The period between January 1 and March 31 is when you can switch between plans. For example, if you had original Medicare and you want Advantage, you can do so in this time-span.

The average price of the monthly premium for the Advantage plans was $19, compared to $21.22 in 2024. As for the prices for 2024, we will have to wait for the end of the year for Medicare to announce it.

“We are committed to ensuring that the health system and Medicare work for people, their families and their providers,” said CMS Administrator Chiquita Brooks-LaSure. “Open Enrollment is the one time each year when more than 63 million people with Medicare can review their health care coverage to find new plans or change existing plans, discover extra benefits and help them save money

Out-of-Pocket Maximums


One of the differences between original Medicare and Advantage is that the Advantage has the maximum limit you can reach for out-of-pocket costs. This is known as out-of-pocket maximum.

This is not the same as deductible and people often confuse these two things. A traditional deductible is the amount you must pay before you receive coverage whereas the maximum prevents you from paying too much for the medical costs that aren’t included.

The maximum limits are different depending on the country you live in. You must review each plan carefully before you make the final decision. Make sure to ask from your provider to give you more details. Sometimes, the figure varies depending on the services you receive.

If you reach the maximum limit, the plan must cover the full cost of the covered services. However, there are still some services that you will have to pay for.

For example, if you select HMO, you will pay for services outside your network. There are some prescription drugs that may not be included in the plan. Furthermore, any additional services or medication that aren’t included in the plan could require you to pay for them even after you hit the maximum. Last but not least, there might be potential expenses for some extra benefits such as vision or dental services.

The bottom line on Medicare Advantage

Medicare Advantage is an attractive program because of its vast coverage and monthly premiums. An increasing number of people are switching from Original Medicare over to Medicare Advantage. And now that you know everything about out-of-pocket costs and their maximum limit, you can consider changing your Medicare plan to benefit you and your unique needs.

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