What does "out of pocket" mean?

What does "out of pocket" mean?

Out-of-pocket costs are costs that Medicare does not cover, and therefore, the patient needs to pay. This includes expenses for services that are both covered and not covered by Medicare. Medicare Part A and Part B do not have maximum out-of-pocket limits.

  • Out-of-Pocket Expenses for Medicare Services

Below are examples of expenses that are out-of-pocket:

  • Premiums
  • Copayments
  • Coinsurance
  • Deductibles
  • Limiting Charges 

Pharmacy Dispensing Fee (Medicare Prescription Drug plans only)

What Is a Limiting Charge?

A patient who uses a doctor that does not accept Medicare assignment must pay a limiting charge. Because the doctor does not accept Medicare, he or she does not accept the Medicare-reduced price. The limiting charge is 15% above this reduced rate.

Services Not Covered by Medicare

Out-of-pocket expenses include those services not covered by Medicare. This includes:

  • Long-term nursing care
  • Acupuncture
  • Cosmetic surgery
  • Health care outside of the U.S.

Limiting Out-of-Pocket Costs

In order to decrease Original Medicare out-of-pocket costs, some choose to purchase Medicare Supplement insurance or Medigap. Plans vary on which of these expenses will be covered.

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What does "out of pocket" mean?