Tips to Minimize Your Medicare Out-of-Pocket Costs

Tips to minimize your Medicare costs

Most Medicare beneficiaries are exposed to out-of-pocket risk in one way or another. According to new research, 39% were enrolled in Medicare Advantage plans in 2018. Such alternatives to Original Medicare have built-in caps on out-of-pocket thresholds. The rest are enrolled in traditional or Original Medicare, which does not include the out-of-pocket cap. However, most of these beneficiaries receive out-of-pocket protection from Medigap, retirement coverage, or Medicaid.

But 10% of Medicare enrollees have no protection against this risk. This is because they are in traditional Medicare but have no supplemental coverage.

That’s where the problem becomes worse. This year, a beneficiary of Original Medicare without supplemental coverage is subject to the $1,484 deductible for inpatient hospitalization and daily pay for an extended hospital stay and a skilled nursing facility. There is also a separate deduction of $203 plus 20% cash protection for most doctors and other outpatient services, including physician-administered drugs for cancer and other severe medical conditions.

Original Medicare — combined with a Medigap plan — is the gold standard of Medicare coverage. How? You’re covered anywhere in the United States and can visit any health care provider who accepts Medicare. Depending on the Medigap plan you choose, most cost-sharing is covered. It has been found that people who choose this option tend to have higher incomes and are better-educated.

What Contributes to Medicare Out-of-Pocket Spending?

Before reducing costs, it is essential to identify the possible reasons that lead to out-of-pocket spendings. Here are some of the common Medicare out-of-pocket expenses and the factors that can affect them.

A. Medicare Premium

Notably, regular Medicare beneficiaries spent an overall average of $2,294 on premiums in 2016. In fact, the premium cost averaged 42 percent of the out-of-pocket expenses of the total beneficiaries that year.

B. Medical And Long Term Care Services

In 2016, Original Medicare beneficiaries spent an average of $3,166 out-of-pocket on long-term medical and care services. The services cost accounted for 58 percent of the beneficiaries’ total out-of-pocket expenses that year.

Some service costs proved to be the most expensive for the beneficiaries.

Long term care facility – $1,014 (32%)

Medical Providers / Supplies – $712 (22%)

Prescription drugs – $651 (21%)

Dental Services – $449 (14%)

Factors Affecting Medicare Out-of-Pocket Spending

Medicare beneficiaries’ out-of-pocket expenses vary significantly based on several other factors, including their gender, age, health status, and whether they had supplemental coverage or not.

  • Age: Beneficiaries aged 85 (and above) spent out of pocket more than twice as those of the 65-74 age group.
  • Gender: Female Medicare beneficiaries spent more out of their pocket than male Medicare beneficiaries.
  • Health: Those in poor health (those with multiple chronic conditions, hospitalized, or lived in long-term care facilities) spent more out-of-pocket than typical Medicare beneficiaries.
  • Supplementary Coverage: Individuals who did not have supplemental coverage spend more than those who received some form of additional coverage.

It has never been easier to get Medicare costs under control. However, there are many ways to get started without actually cutting into the benefits. Below, we discuss several such options.

1. Negotiate

Talk with your doctor, hospital, laboratory, etc., if they do not cover the specific service you need. There’s no guarantee they’ll agree, but they can potentially offer you lower rates than they often do for people who don’t otherwise have insurance.

Please note that if Medicare or a Medicare Advantage plan denies service coverage (even after you have appealed the decision), you are solely responsible for Medicare’s standard rates for it. You can usually find rates for Part B services online by visiting the Part B Medicare Administrative Contractors (MAC) website. This amount is often much less than what the provider charges.

2. Go for Medicare Savings Programs

Look for Medicare savings programs if you can’t afford the deductibles, premiums, co-pays, or co-insurance costs under Part A/B. Likewise, if you can’t afford the costs of Part D, look for the Medicare Extra Help Program. These programs, based on your financial situation, can reduce your costs. However, eligibility rules vary slightly from state to state.

3. Ask About Your Hospital Orders

Not all hospital stays charge the same — even when you stay overnight. Ask your doctor about your orders and inpatients/observations during your hospital stays. 

When you are admitted as an inpatient, Part A coverage begins. Part B pays when you’re placed under observation. Since you pay 20% for each Part B service, you may end up paying more if you paid the single Part A deductible for the inpatient stay.

Hospital orders may also affect whether Medicare will pay for your stay in a skilled nursing facility. (To be eligible for skilled nursing facility stay, you must have been in the hospital for at least 3 days before being transferred to a skilled nursing facility.)

4. Medicare Part B Enrollment Deadline After Leaving Your Job

If you have an employer with 20 or more employees, you do not need to register for Medicare at 65. Instead, you can choose to have coverage through your employer and don’t need to pay Part B premiums. But you must have to sign up within eight months of leaving your job, or you may have to wait till the next enrollment period (January through March, for coverage to begin on July 1). It means you could go for several months without coverage. You may also get hit with the 10% lifetime late-enrollment penalty.

So, these were the tips that can help you reduce Medicare out-of-pocket costs. If you want to know more about these tips like Medicare Savings Program and other information regarding Medicare or Part C Enrollment, reach out to our licensed agents specializing in Medicare.