Medicare Maximum Out Of Pocket

Here it is.  The downloadable version of the table, as originated on the Medicare website, is the source of the confusion.  The Medicare supplement benefit table.    It’s the exact same table we used to find on the Medicare.gov website and in their publications.

The benefit table shows twelve different Medicare supplement plans.  Ten across, then asterisks on the F and G to indicate those plans have a high deductible option.

Medicare’s Mistake

Simple enough, one would think.

In studying this table you will quickly notice that both Plans K & L have this extra box titled “out-of-pocket limit”.  But then, none of the other supplement plans show a row with the same title?  

Because of this failure in communications, it’s easy to assume that those plans must not have an annual maximum out-of-pocket.  Right?  That is certainly what most people assume, including many insurance agents that are supposed to know better.

You know what they say about assumptions.  Of course.

But the blame here lies directly at the feet of Medicare for a poorly designed presentation and it’s the governments’ fault.  The government doesn’t typically have ears for consumer feedback. I can also tell you from years of experience, many of the government publications are not written by industry experts.

Let’s look at why these two Medigap plans, K and L show a maximum out-of-pocket designation where the other plans simply don’t need one.

Who Needs A Maximum Limit When The Plan Pays 100%

You might notice when you look closely at the table, most of the Medicare supplement Plans show 100% coverage for the major benefits.

For example, Part B coinsurance or copayment.  That is the 20% that Medicare Part B does not cover. You have 100% coverage.  Everything is paid for until you reach Plans K and L.  Medigap Plan K has only 50% coverage.  Medigap Plan L has only 75% coverage.

Look at Part A Hospital coinsurance.  With no supplement you have 60-days of coverage before you start paying a daily copay.  That copay is covered 100% by a Medicare supplement plan, except for Plans K & L.  Plan K only covers 50%.  Plan L covers 75%.

Skilled Nursing.  Medicare Part A covers the first 20-days 100%, with the consumer paying a daily copay for days 21 through 100 totaling no more than $15,800. That’s the maximum for 2023.

If you have Medicare supplement Plan A or Plan B, you will pay whatever Medicare doesn’t pay. Which means if you spend 100-days in a skilled nursing facility you will pay up the maximum of $15,800.   If you have any other supplements except supplement plans K and L, you have 100% coverage.  100-days of skilled nursing care cost you nothing out-of-pocket. Zero. ($0).

Plan K & L, The Only Partial Coverage Plans

So, the reason that Medicare supplement Plans K & L have an out-of-pocket maximum is because they only offer only partial coverage for major services.  The consumer has a large financial exposure to medical bills because you do not have 100% coverage for these major services.  Without a set maximum out-of-pocket limit for those two plans, the consumer would have unlimited financial exposure.

Think of the out-of-pocket maximum as only referencing the benefits that are covered at either 50% or 75% by these two plans.

Another way to describe this is simply with a question.  How can a consumer have any financial risk if the Medicare supplement is paying 100% of the Medicare bill?

So Many Professionals Got This Wrong!

With that covered, this next part is where it gets mind blowing.  Hopefully, if my explanation of this is good, a light bulb will go off and it will all finally come together.   Please let me know in the comment section below if the way I illustrate this made the light bulb go off or if I need to do more work on my explanations.

There are two pieces to this puzzle that you need to know for all of this to make sense.

Medicare Is Not Long-Term Care

First is that Medicare is not Long-term Care.   Long-term care needs are not even considered on this benefit table.

For example, your Skilled Nursing Care benefits end at 100-days.  At 101-days of Skilled Nursing you have no Medicare benefits, and no Medicare supplement benefits.  It doesn’t matter if these supplement plans have zero coverage for Skilled nursing like Plan A and Plan B or 100% coverage like Plans C, G and Plan N and so on, or just 50% and 75% coverage like Plans K and L.  At day 101 your Medicare coverage is depleted.  You are on your own unless you have Long-Term Care Insurance.  That is where your Long-Term Care insurance policy will begin.

Does 100% Mean Everything?

Second, and this is key, the maximum out-of-pocket limit is only referencing what the Medicare supplement covers.

For example, the maximum out-of-pocket shown for Plan K is $6,940.  But that $6,940 is only applicable to what the supplement plan covers.  It does not cover the Part B deductible. That’s an additional expense not included in the maximum out-of-pocket.  It doesn’t cover Excess Charges.  If you have Excess Charges they are in addition to the maximum out-of-pocket.

Now let’s apply that information to the Medicare supplements Plan A and Plan B.  For the Medicare services that Plan A or Plan B cover, they cover at 100% of the Medicare bills not paid for by Original Medicare.  The out-of-pocket maximum only references the portion of Medicare services covered by the supplement.  There is no out-of-pocket maximum listed because for the benefits they cover, the cover at 100%.   There is simply no supplemental insurance for Skilled Nursing.

That means you have a maximum out-of-pocket of zero for the benefits it covers.  It just doesn’t cover as much as the other plans. There are inconvenient holes in the coverage.

Does that make sense?

Is There a Maximum out-of-pocket for Medicare Plan G?

The maximum out of pocket for Plan G is the Medicare Part B deductible ($226 for 2023). Medicare supplement Plan G covers all  inpatient and outpatient Medicare expenses not paid for by Medicare.  Your only expense is the annual Part B deductible.  There is also no annual or lifetime cap on the benefits your receive. 

Does Plan G Have a Deductible?

No, regular Plan G does not have a deductible.  However, you must pay the annual Part B deductible which is $226 for 2023.  The high-deductible version of Plan G has a deductible of $2,700 for 2023.  That is also its maximum out-of-pocket.  

Considering what you now know, what is the maximum out-of-pocket for a Medicare supplement Plan G?

Well, we have to exclude Foreign Travel because Medicare itself does not cover any foreign travel emergency healthcare.   That is simply an extra benefit provided by the supplement.

Medicare supplement Plan G covers 100% of every Medicare service it covers. The only inpatient or outpatient Medicare service it does not cover is the annual Medicare Part B deductible.  That is $226 for 2023.    That’s it.  If you have a Medicare supplement Plan G, your maximum out-of-pocket financial risk for 2023 is $226.

If you were to list a maximum out-of-pocket the way this table is designed, it would be zero.  But considering real life, your maximum out-of-pocket will be the Medicare Part B deductible.  This is a heck of a lot less than the financial exposure you have with Medicare supplement Plans K and L.  In fact, it is the lowest maximum out-of-pocket financial risk a consumer can choose with Medicare.

Considering real life and not the limits of this table, let us look at the maximum out-of-pocket for the other popular Medicare supplements.

Medigap Plan N Out of Pocket Maximum

When a Medicare supplement does not cover the Part B Excess Charges, like Medigap Plan N and Medigap Plan D for example, we presume the consumer will avoid excess charges.  It’s very easy to do.  Please see my video on Best Medicare Supplement Plans for a detailed explanation of how easy it is.

Does Medicare Supplement Plan N Have a Deductible?

No, Plan N does not have a deductible.  However, you will have to pay the annual Medicare Part B deductible which is $226 for 2023.  

Does Plan N Have Co-pays?

Yes.  There is a $20 copay for office visits that involve diagnosis or evaluation.  There is a $50 copay for emergency room visits that do not result in a hospital admission.  Urgent Care and Telehealth visits can be billed as an office visit.    There is no copay for physical therapy or chemotherapy office visits.  

Does Plan N Cover Excess Charges?

No.  only Plan G and Plan F will pay Part B excess charges.  However, excess charges are easy to avoid using Medicare’s online physician lookup tool. 

With the presumption that excess charges will be avoided, the Medicare Supplement Plan N maximum out-of-pocket will be the amount of the Medicare Part B deductible  plus any of the copays you pay for office visits.  There is a maximum of $20 for an office visit and a maximum of $50 for a hospital emergency room visit.

You may not have foreknowledge of the exact number of office visits you will have in a year, but for all practical purposes that cost will likely be less than the cost of the Part B deductible.

In case you were not aware, not all office visits qualify for the $20 copay.  For details, please see my video on Best Medicare Supplement Plans linked below and above my left shoulder.

The maximum out-of-pocket limit for a Medicare supplement Plan N is among the lowest available in Medicare.    For all practical purposes it will be a number less than twice the Medicare Part B deductible and certainly much, much lower than Medicare supplement Plans K and L.

Medigap High Deductible Plan G or Plan F Out of Pocket

What about the high-deductible Medicare supplements?  That’s easy.  The maximum out-of-pocket is equal to the deductible.  That deductible is $2,490 for the year 2022.  It increases each year with increases in the Consumer Price Index -U rounded to the nears $10 increment.

That $2,700 deductible is much a lower maximum out-of-pocket than Medicare supplement Plans K and L which are $6,940 and $3,470 respectively (2023).

With this understanding of the benefit table design, you should find it easy to define the maximum out-of-pocket limits for each of the supplement plans.

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