More than 70 million older adults and people with disabilities rely on Medicare for their health care coverage. Medicare covers all reasonable and necessary care, with the exception of dental, vision, hearing and long-term care. But, Medicare comes with a variety of out-of-pocket costs, including a monthly Part B premium, deductibles and copayments. Because more than half of people with Medicare have modest or low incomes, even with Medicare, health care costs can be prohibitive. Congress should address Medicare costs.
More than 17 million people with Medicare had annual incomes below $25,000. Their Medicare Part B premiums easily consume a large portion of their Social Security check. Their other out-of-pocket costs can also be substantial.
If you’re focused on spending as little as possible on your health care, you still should consider enrolling in traditional Medicare. While you have higher upfront costs than in Medicare Advantage, you tend to have much lower costs when you need care. And, even if you don’t need much care today, health insurance is about protecting you from unforeseeable financial risk when you do need care.
People often do not appreciate that Medicare Advantage tends to be a lot more costly than traditional Medicare once you get sick and need to use your insurance. Medicare Advantage plans start charging you a lot when you see a lot of physicians, use hospital services, or need rehab services. And, while all Medicare Advantage plans have an out-of-pocket limit, the limit does not apply if you need to get care out of network or the Medicare Advantage plan second-guesses your treating physician, deems the care unnecessary, and refuses to cover your care.
In short, out-of-pocket costs in Medicare Advantage can be sky-high. According to KFF, for inpatient hospital care, enrollees in a PPO could pay between $330 and $550 a day for five to seven days. In an HMO, they could pay $275 a day for as many as eight days.
In traditional Medicare, people pay most of their out-of-pocket costs upfront, when they buy supplemental coverage (“Medigap”) that fills gaps in Medicare. Medigap can be quite expensive and so is unaffordable to many people. (Many people get help paying these costs through Medicaid or a buy-in program because their income is low.) When they get sick, with Medigap, their costs are generally covered in full.
Here’s more from Just Care:
- 2026: What are your Medicare premiums and out-of-pocket costs?
- 2027: Five things to think about when choosing between traditional Medicare and Medicare Advantage
- 2026: Medicare drug coverage and costs
- One third of Social Security benefits spent on Medicare costs
- Health care costs are prohibitive for one in three people with Medicare
