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Mark Miller: Remaking Retirement

Medicare Out-of-Pocket Costs: How Do Enrollees Get Protection?

Congress could mitigate inequities with some sensible Medicare program reforms, says Morningstar contributor Mark Miller.

Medicare smooths out much of the variation in the healthcare expenses that seniors incur--but out-of-pocket costs can be high if you’re not careful.

Most Medicare enrollees blunt out-of-pocket risk one way or another. According to new research by the Kaiser Family Foundation, 39% were enrolled in Medicare Advantage plans in 2018; these managed-care commercial alternatives to Original Medicare have built-in caps on out-of-pocket outlays. The rest are enrolled in traditional Medicare, which does not have a built-in out-of-pocket cap. Most of these enrollees get out-of-pocket protection from Medigap, retiree coverage, or Medicaid.