Tips for Lowering Out-of-Pocket Medicare Expenses

Last Updated : 09/16/20185 min read

Out-of-pocket Medicare expenses include all medical expenses that you have to pay out of your own pocket, such as deductibles, copayments, and coinsurance. If you are familiar with an employer-sponsored health-care plan, you may expect an out-of-pocket maximum, such as $2,000 for an individual per year.

Find affordable Medicare plans in your area

Bear in mind that Original Medicare (Part A and Part B) has no out-of-pocket maximum. While medical expenses can overwhelm an individual or family budget, there are ways to reduce your Medicare costs.

Evaluate your prescription drug coverage

Prescription drugs could be a big out-of-pocket expense, especially if you are on specialty drugs or multiple high-cost brand-name drugs. If you need prescription drug coverage, you generally need to enroll in a stand-alone Part D Prescription Drug Plan or a Medicare Advantage prescription drug plan offered by a private insurance company. Medicare Part A and Part B generally don’t cover most prescription drugs. Not all plans cover all drugs equally. Compare Medicare Part D plans to find the one with the cheapest prices for the drugs you need the most. Plans with maximum spending limits for prescription drugs could also significantly lower your out-of-pocket Medicare costs.

Ask for generic prescription drugs

While there may be instances in which brand name prescription drugs are medically necessary, in many cases the generic drugs are far cheaper, typically 80 to 85% less, according to the Food and Drug Administration (FDA). Generics have the same active ingredients and work in the same way as brand name prescription drugs, according to the FDA. If your Medicare prescription drug plan requires that you pay, for example, 25% of the full amount of each drug you purchase, a generic drug could save you a lot of money. Many times doctors may not consider the prices of medications when they write prescriptions. Do not be afraid to talk with your doctor or your pharmacist to find out whether a generic may be an option for you. It could make a big difference to your budget.

Review your eligibility for Medicare Savings Programs and Medicare’s Low Income Subsidy

Medicare offers financial support to Medicare beneficiaries with low income and limited resources, such as the Medicare Savings Program and Medicare’s low income subsidy. The National Council on Aging has an online tool, BenefitsCheckUp, which helps determine your eligibility for the programs and will assist you with an easy application. In many cases, the programs can offer lower Medicare costs with reduced premiums, deductibles and copays. Find out more at

Choose a Medicare Advantage Plan

A Medicare Advantage plan offered by a private insurance company is an alternative way to get your Original Medicare (Part A and Part B) benefits. Medicare Advantage must cover everything Original Medicare covers (except hospice care which is still covered by Part A) but may also provide additional benefits, such as coverage for routine dental, routine vision, hearing aids, and prescription drugs.

Find affordable Medicare plans in your area

Find Medicare plans in your area

Some Medicare Advantage plans may also have set out-of-pocket maximums. Some Medicare Advantage plans charge a premium and some have a $0 monthly premium. With Medicare Advantage you will still have to pay your Part B premium. While some plans, such as HMOs, may have stricter rules and more restrictive doctor choice than Original Medicare, copayments may be less, which translates to fewer out-of-pocket costs for you.

Consider a Medicare Supplement (Medigap) Policy

A Medicare Supplement (Medigap) policy may help you avoid significant out-of-pocket costs by helping cover Original Medicare’s copayments, coinsurance and deductibles. These covered costs could include Part A coinsurance, Part B coinsurance, Part A hospice care coinsurance, skilled nursing facility care coinsurance, Part A deductible, Part B deductible, and more. There are monthly premiums attached to Medicare Supplement policies but you may be able to save money if the savings of the coverage will be greater than the amount you spend each month on the premium.  Note that you can’t have a Medicare Supplement plan if you already have a Medicare Advantage plan.

Review your Medicare coverage every year

Your out-of-pocket expenses will be determined largely by the services you need, how often you need them, and how much you pay for each service or visit to the doctor. Medicare prescription drug plans and Medicare Advantage plans vary in their premiums, deductibles, and coinsurance amounts. Remember, higher monthly premiums usually mean fewer out-of-pocket expenses. If you have extensive treatment needs or you visit the doctor frequently, you may save money by choosing a plan with a higher monthly premium. Alternately, if you are rarely sick and have no diagnosed illnesses, you may save money by choosing a plan with a low monthly premium and a high annual deductible. Compare the out-of-pocket costs associated with the prescriptions and services you need every month across different plans. A thorough review of your plan every year and a comparison of your plan with the others available in your area will help keep your Medicare costs down by ensuring that you have the plan best suited for you.

If you’d like more information about reducing your out-of-pocket costs with Medicare, I’m happy to answer your questions. To request personalized information via email or schedule a return telephone call, click the appropriate link at the bottom of the page. You can also view plans in your area by clicking the “Compare Plans” button.


Find affordable Medicare plans in your area

See all Original Medicare articles >

Find and compare Medicare plans and save up to $531/year*

Compare Plans Now

Have a question? Talk to a licensed insurance agent.

  • 1-844-847-2659 TTY Users 711
  • Mon - Fri, 8am - 8pm ET