New legislation introduced in the Senate would create a $5,000 cap on out-of-pocket costs for Traditional Medicare (Parts A and B) beneficiaries in an attempt to level the playing field between the Traditional Medicare offering and those of Medicare Advantage (MA) plans.

Sen. Kirsten Gillibrand (D-N.Y.), ranking member of the Senate Aging Committee, introduced the proposal – called the “Medicare Cost Cap Act” -- this week along with 14 of her Senate colleagues.

Currently, Traditional Medicare does not have a limit on out-of-pocket costs, meaning beneficiaries are confronted with unlimited, catastrophic healthcare costs if they face serious illness or hospitalization.

“MA, employer-sponsored insurance, and insurance bought on the marketplace all have annual caps on out-of-pocket spending. An out-of-pocket cap would level the playing field between Traditional Medicare and MA and guarantee that all people with Medicare are protected, no matter what coverage option they choose,” the Gillibrand press release said.

The legislation also enhances programs that protect low-income Medicare beneficiaries, shielding seniors and people with disabilities who already rely almost exclusively on their Social Security benefits from rising premiums and out-of-pocket costs.

In 2028, 3.2 million Medicare beneficiaries are projected to directly benefit from an out-of-pocket cost cap. Over the next 10 years, over 52 percent of beneficiaries are expected to exceed the proposed $5,000 cap at least once. On average, this plan would save enrollees $1,024 per year, the release said.

“While financial support does exist for low-income Medicare enrollees, oftentimes confusing and extensive administrative barriers prevent and discourage beneficiaries from accessing these resources,” Gillibrand said.

These barriers adversely affect low-income seniors who struggle to afford healthcare. Over half a million enrollees who qualify for Medicare Savings Programs are not enrolled, leading to missed benefits and higher out-of-pocket costs for some of the most financially insecure Americans. In addition to creating an out-of-pocket cap, the legislation will improve assistance for low-income beneficiaries, such as seniors that rely exclusively on Social Security for their income, she added.

Questions or comments on this article? Contact Patrick Connole at pconnole@parkplacelive.com.