Medicare Costs

What does your Medicare plan actually cost? Often, insurance plans and Medicare materials come with a lot of money-related phrases and acronyms that can be confusing. We’re here to help you understand all the basics of Medicare cost words and how they affect you.

OOP: Out of Pocket

OOP is the money that you pay out of your pocket for your healthcare costs. Plans like Medicare Parts A & B do not have OOP maximums, meaning that there is no cap on the amount of money that you pay after your deductible and the costs that your insurance covers.

Medicare Advantage plans tend to have an OOP maximum, meaning that you pay a certain amount of your healthcare costs up to a maximum, then your insurance covers the rest of the costs. The Centers for Medicare and Medicaid Services set a maximum OOP amount, but plans can have lower limits at their own discretion.

Costs that contribute to an OOP maximum include a deductible, coinsurance and copays.

Deductible

A deductible is the amount of money that you must first pay before your insurance plan starts covering your costs. For example, you may have a $1400 deductible. This means you pay $1400 before your insurance company starts paying your costs.

Deductibles are different from OOP costs because they are paid up front before the insurance company begins coverage. OOP costs are the maximum amount you pay in a year, including the deductible, coinsurance and copays.

Deductible costs are lower than OOP costs, as they are included in the OOP amount.

Premium

In addition to costs like deductibles, OOP, copays and coinsurance, there is a monthly amount of money that you pay the insurance company that doesn’t cover any bills or healthcare costs. Think of it as a monthly subscription price.

Coinsurance

Once you have paid your deductible, your insurance company will start covering a certain amount of the costs. If your insurance covers 80% of a cost, you must pay 20% of approved services. So, if a bill is $100, you would pay $20 and your insurance company would pay $80.

Coinsurance costs kick in once you have paid your deductible. After you have reached the OOP maximum, your insurance company will pay 100% of eligible costs.

Copay

A copay is a set amount that you pay at the time of a visit to a doctor’s office. So, your plan may have a $40 copay amount for a visit to a doctor’s office, and a $15 copay for a visit to a dentist. When you arrive at your appointment, you will pay that amount on the spot.

Any questions? You can contact our team of licensed insurance agents with any questions or shop for Medicare plans here!

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