Out-of-Pocket Maximum

Extended Definition

The out-of-pocket maximum (OOPM) is a yearly limit on your healthcare spending. Once you reach this amount through deductibles, copays, and coinsurance, your insurance covers 100% of covered services for the rest of the year.

What Counts Toward OOPM

Usually counts:

• Deductibles
• Copays
• Coinsurance

Usually doesn’t count:

• Monthly premiums
• Non-covered services
• Out-of-network costs (varies)
• Balance billing

Medicare and Out-of-Pocket Maximums

Plan Type	Out-of-Pocket Maximum
Traditional Medicare	None (unlimited exposure)
Medicare Advantage	Required (varies, often $3,000-$8,000)
Medigap Plans	Provides protection through coverage

Why This Matters for Joint Pain

Without protection (Traditional Medicare alone):

• No limit on coinsurance costs
• Major surgery could cost thousands
• Multiple treatments add up
• Risk of high medical bills

With protection:

• Predictable maximum spending
• Peace of mind for major procedures
• Budget planning possible

Protection Options

Add Medigap to Traditional Medicare:

• Covers coinsurance (effectively limiting costs)
• Plan G: You pay deductible, then Medigap covers rest
• Higher premiums but lower risk

Choose Medicare Advantage:

• Built-in out-of-pocket maximum
• Typically $3,000-$8,000 per year
• Trade-off: network restrictions, prior auth

2024 Limits

• Medicare Advantage OOPM: Max $8,850 (in-network)
• Many MA plans have lower limits
• Compare plans during open enrollment

Example Scenario

Patient with $5,000 OOPM needs knee replacement:

• Surgery and rehab billed: $50,000
• Patient pays copays/coinsurance until hitting $5,000
• Remaining costs: $0 for covered services that year