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Is the Medicare Advantage Plan Out-Of-Pocket Limit the Same as a Deductible?

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Summary: The out-of-pocket maximum for Medicare Advantage plans is not a deductible. It is the highest yearly amount you will have to pay out of pocket for covered health-care services.

The out-of-pocket maximum for Medicare Advantage plans is different from a deductible. Out of pocket maximum is the highest yearly amount you will have to pay out of pocket for covered health-care services.

This spending maximum is one important difference between Medicare Advantage plans and the traditional fee-for-service Medicare program. Original Medicare doesn’t have a yearly cap on your health-care costs.

Medicare Advantage out-of-pocket limits went down in 2019

An annual maximum out-of-pocket limit protects you from having to pay an unlimited amount for your health-care costs. Of course, the lower that limit is set, the better it protects you. Each Medicare Advantage plan can set its own out-of-pocket (OOP) limit, but it must be at least as low as a certain amount the government sets each year.

Here’s some good news. eHealth reported on the average Medicare Advantage OOP limit* in the first quarter of 2018 compared with the first quarter of 2019. It went down about 11% – from $5,185 to $5,164.

Medicare Advantage Out-of-Pocket Limits

Source: Medicare 2019 Open Enrollment: Costs and Sentiments, May 2019

This yearly cap does not include monthly premiums, but annual deductibles, coinsurance, and copayments may all count towards this maximum limit. The out-of-pocket maximum may be different for each individual Medicare Advantage plan and can change from year to year. Once you have reached the plan’s spending limit for that year, then your Medicare Advantage plan will cover 100% of covered health-care costs for the rest of the year.

* This report reviews costs and trends among people who purchased Medicare insurance products through eHealth during January 1 through March 31, 2018 and the same period in 2019.

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