Senate Democrats Plan Bill to Cap Out-of-Pocket Medicare Costs

The measure would count payments made by Medigap or retiree health plans toward the limit and would eliminate an asset test for certain low-income assistance programs.

Medicare requires beneficiaries to pay 20 percent of covered medical services after any deductible. Without an upper limit, costs for serious illness or extended hospital stays can reach thousands of dollars. About 43 percent of traditional Medicare enrollees buy separate Medigap coverage to protect against these expenses.

Premiums for those policies have risen rapidly and can cost thousands of dollars annually.

The bill would require Medicare to cover amounts above the $5,000 cap. The limit is lower than the current $9,250 cap that applies to Medicare Advantage plans. The legislation has not yet been scored by the Congressional Budget Office. Earlier estimates indicate a $5,000 cap could reduce average annual costs for enrollees by about $1,200 through lower direct payments and reduced Medigap premiums.

Passage this year is considered unlikely. Supporters said they will continue to pursue the change in the next Congress.