Understanding Medicare’s Out-Of-Pocket Maximum (MOOP)

By: Agnus Smith
Published: Thursday, November 29 2018
Last Updated: 4 years ago

Believe it or not, but your Medicare coverage is one of the most comprehensive health insurance options available today. It’s pretty remarkable since most Americans won’t pay a premium for Part A. However, as you probably know, premiums aren’t always the healthcare costs that hit hardest, rather it’s those pesky out-of-pocket expenses. While traditional health insurance used to come with a spending cap or limit on what you’ll pay, the question on everyone’s mind is whether or not there is a Medicare out-of-pocket maximum. Well, here’s what you need to know.

What Is Medicare’s Out-Of-Pocket Maximum (MOOP)?

Medicare's out-of-pocket maximum is the most amount you will have to pay for covered services through the selected plan during the plan’s benefit period, which typically lasts a year. After this amount is reached, the insurer will pay 100% of the expenses that are covered. Note that Medicare out-of-pocket maximum doesn't include monthly premiums or any service that is not covered under the plan benefits. This spending cap may vary depending on the type of plan assigned to the insured person.

Does Original Medicare Have A Spending Limit?

No, Original Medicare does not have an out-of-pocket maximum that you need to be aware of, nor any sort of spending limit. It’s actually quite the opposite. Rather than a spending cap, there is a limitation to how much your Original Medicare coverage will pay for your services. For example, Medicare Part A will only pay for your hospital stay for the same injury or illness for up to 90 days before you either have to tap into your 60 lifetime reserve days, or start paying for everything out-of-pocket.

What About Medicare Advantage?

When people refer to Medicare’s out-of-pocket maximum, they are typically referring to the spending cap under Medicare Advantage plans. Since Medicare Advantage (Part C) plans are offered by private health insurance companies, they are more similar to traditional health insurance. Meaning, they usually put a limit on the amount of money you will need to spend each year.

It’s important to note that there are some possible exceptions that you want to be cautious about. For example, if you choose an Advantage plan that does not come with a MOOP, then you may end up without a spending cap, which can cost you. There also may be differences depending on whether or not you stay in your provider-network or not, so make sure to get a good understanding of your plan before signing up.

What About Medicare Supplement (Medigap)?

Medigap plans are purchased for this exact reason, they cover your out-of-pocket expenses. Currently, there are 10 Medicare Supplement plans for you to choose from, each coming with their own costs and expenses. However, as soon as you reach a certain spend limit, your Medicare Supplement plans may cover 100% of your remaining costs, acting as your out-of-pocket maximum.

How Does It Work?

When you have reached your annual Medicare out-of-pocket maximum, all in-network medical expenses are covered for the rest of the benefit period at no cost to you. For example, if your out-of-pocket maximum is $7,000 per year, and you have already spent $7,000 in deductibles, copayments, and other covered services, the insurance company will pay all eligible expenses beyond this amount. There is typically no Medicare spending limit or threshold to how much the insurer pays here.

How You Can Avoid Paying Out-Of-Pocket Costs

There are certain things that you can do and follow if you want to decrease Medicare spending limit or avoid paying out of your pocket for medical services. Some of these options include the following:

Staying In-Network

Any facility or doctor that doesn't accept your plan is considered to be out-of-network. Chances are all your medical needs can be taken care of through in-network service providers. If this is likely the case, it is better to stay in-network.

Keeping Up With Preventive Care

Preventive care is the first and safest way to help detect and prevent any serious illness. This care is the way to stay healthy. By having a routine checkup every year, you are not only getting the care you need but saving a lot of money and trouble of Medicare spending limit or spending cap.

Most preventive care screenings include an annual physical exam, cholesterol test, blood pressure test, diabetes and cancer screenings, Pap tests and mammograms.

Visit Urgent Care When Necessary

If your condition is not life-threatening, and your doctor's care is expensive, consider urgent care centers. These centers offer quick and better attention to your ailment plus they are very reasonable in terms of medical cost. You can save thousands of dollars with these centers for minor treatments due to cuts, burns, sprains, flu, fever, back pain, infections, and other symptoms.

Take Advantage Of Convenience Care Clinics

Some grocery stores and retail centers where there are pharmacies also have care centers that offer quick access to cost-effective medical care and quality service. If you can't immediately get an appointment with your physician or if the physician charges are not covered, these centers can be of great help.

Most convenience care centers treat illnesses and symptoms such as rashes, flu, burns, earaches, nose and throat infections and other medical conditions.

Use Telehealth/Telemedicine Options

When your health care provider is unavailable or you are out of town and can't get access to care for a minor health issue, telehealth can be a reliable option. Almost all health plans cover this feature free of cost. You can talk to a board-certified doctor by online video chat or phone through this option. This is a convenient and cost-effective approach saving hundreds of dollars in visits, tests, and travel.

Understand Your Expenses Ahead Of Time

Note that in-network independent centers for radiology, surgery and lab tests are far more affordable than big hospitals and private clinics. They are located in many places across the US and equipped with all types of diagnostic services and treatments. And most of these centers have their own official websites where you can learn about the expected cost for every treatment that you are receiving.