Geoff is now 79 years old and has dementia. He started Medicare Parts A and B when he was 65 and also continued working at least part time until he was 75.

When he lost his group health insurance, he had just original Medicare parts A and B, so he was covered at about 80% for hospital and doctor expenses plus some lab and diagnostic costs. Geoff and his wife learned how much his 20% could cost the year he was presented with a $6,000 hospital bill and a $2,000 ambulance bill.

He is now on a Medicare Advantage plan that costs $0 per month for the premium. He pays a co-pay each time he uses a medical service, but his financial risk each calendar year is capped at his plan’s maximum out-of-pocket amount. (This amount does not include the cost of prescriptions or money spent on dental, vision, and hearing services.)

The vast majority of people do not incur enough costs to reach their Maximum Out-of-Pocket (MOOP) costs each year, but Medicare Advantage plan members should always know their MOOP so they know their financial risk. The highest legal limit for MOOP in 2021 is $7,550 for HMOs and $11,300 for PPOs, but plans in many parts of the country have MOOPs that are lower than this.

The fastest way to reach the Maximum Out-of-Pocket limit on a Medicare Advantage plan is to get cancer. Most plans pass 20% of the costs of chemotherapy and radiation on to the patient. Cancer treatments often spread over more than one calendar year so some people reach their MOOP limit two years in a row. A cancer insurance plan pays cash to the patient upon a cancer diagnosis and can bring peace of mind to the policy holder.