Medicare Advantage plans set their own out-of-pocket spending limits, and the highest ones typically range from $6,700 to $10,000 per year for in-network care

The out-of-pocket maximum is the most you will pay in a calendar year for covered services before your plan pays 100 percent of costs. Medicare sets a legal cap on this amount each year — for 2024, that cap is $10,000 for in-network services. Individual plans can choose to set their limit anywhere from zero (some plans have no out-of-pocket maximum) up to that legal ceiling.

Plans with higher spending allowances — meaning higher out-of-pocket maximums — usually charge lower monthly premiums. Plans with lower out-of-pocket maximums typically cost more per month. This trade-off is the central choice you make when comparing plans.

The plan documents you receive from insurers list the out-of-pocket maximum clearly, usually on the first or second page. You can also find this number on Medicare.gov by entering your zip code and reviewing each plan's summary of benefits.

Key Takeaways

  • Medicare Advantage plans can set out-of-pocket maximums anywhere from $0 to $10,000 for in-network care in 2024, and this limit resets every January.
  • Higher out-of-pocket maximums usually mean lower monthly premiums, while lower maximums mean higher premiums — you are trading monthly cost against worst-case cost.
  • The out-of-pocket maximum appears in the plan's Summary of Benefits document and on Medicare.gov's plan comparison tool.
  • Out-of-pocket limits for out-of-network care are typically much higher or unlimited, so plans with high in-network maximums may still expose you to large bills if you see out-of-network providers.

Why plans with higher out-of-pocket limits charge lower premiums

Insurance companies price plans based on expected costs. A plan that promises to cap your spending at $6,700 per year will collect higher premiums from all members to cover the risk that some members will reach that cap. A plan that allows spending up to $10,000 spreads that risk differently, so it can charge less per month.

This means a plan with a $10,000 out-of-pocket maximum might have a $0 monthly premium, while a plan with a $3,000 maximum might charge $150 per month. Over a year, the $0-premium plan costs you $0 in premiums but could cost up to $10,000 in medical bills. The $150-premium plan costs $1,800 in premiums but caps medical bills at $3,000, for a total of $4,800 in the worst case.

Which plan costs less depends on how much medical care you actually use. If you rarely see doctors, the higher-maximum plan saves money. If you have chronic conditions and see specialists regularly, the lower-maximum plan may cost less overall.

How to compare out-of-pocket maximums on Medicare.gov

Go to Medicare.gov and select "Find Care Providers and Compare Medigap and Medicare Advantage Plans." Enter your zip code and the month you want coverage to start. The site will show you all available Medicare Advantage plans in your area.

For each plan, click "Summary of Benefits" to open the full document. Scroll to the section titled "Out-of-Pocket Maximum" or "Maximum Out-of-Pocket Costs." This section lists the in-network maximum and, separately, the out-of-network maximum.

You can also read the plan's Evidence of Coverage document, which is the complete legal contract. The out-of-pocket maximum appears in the first few pages, usually in a table comparing key plan features.

The difference between in-network and out-of-network out-of-pocket limits

Most Medicare Advantage plans have two separate out-of-pocket maximums: one for in-network providers and one for out-of-network providers. The in-network maximum is what you will see advertised — often $6,700 to $10,000. The out-of-network maximum is frequently much higher, sometimes $15,000 to $20,000, or unlimited.

This matters because once you reach your in-network maximum, the plan pays 100 percent of in-network costs for the rest of the year. But if you see an out-of-network provider, you keep paying coinsurance or copays until you hit the out-of-network maximum — which may not happen until much later or at all.

If you have doctors or specialists you see regularly, check whether they are in-network before choosing a plan. A plan with a $10,000 in-network maximum is only valuable if your providers accept it.

Plans with zero out-of-pocket maximums

Some Medicare Advantage plans advertise zero out-of-pocket maximums, meaning there is no cap on what you pay. These plans typically charge higher monthly premiums to offset the lack of a spending ceiling. They are most common in areas with high concentrations of older adults or in plans run by large insurers with many members to spread risk across.

A zero out-of-pocket maximum does not mean you pay nothing — you still pay copays and coinsurance for each service. It means the plan will not stop charging you those amounts at any point in the year. For someone with very high medical costs, this can be riskier than a plan with a defined maximum, even if the monthly premium is higher.

Check your state and zip code on Medicare.gov to see whether any plans in your area offer this feature. Availability varies widely by region.

How prescription drug costs affect your out-of-pocket maximum

Medicare Advantage plans include prescription drug coverage (Part D). Costs you pay for covered drugs — copays, coinsurance, and deductibles — count toward your out-of-pocket maximum. Once you reach the maximum, the plan pays 100 percent of both medical and drug costs for the rest of the year.

If you take expensive medications, this can mean reaching your out-of-pocket maximum quickly. Review the plan's drug formulary (the list of covered drugs) and check the copay or coinsurance for each medication you take. Add those costs to your expected medical costs to estimate whether you will hit the maximum.

Some plans have separate deductibles for medical services and drugs, so you may reach the drug deductible before the overall out-of-pocket maximum. The Summary of Benefits document breaks this down clearly.

What happens after you reach your out-of-pocket maximum

Once you reach your plan's out-of-pocket maximum for the year, the plan pays 100 percent of covered services for the rest of that calendar year. You pay nothing out of pocket for any covered medical service or drug, as long as you use in-network providers.

This protection ends on December 31. On January 1, your out-of-pocket counter resets to zero, and you start paying copays and coinsurance again. If you have ongoing medical needs, you may reach the maximum again in the new year.

Keep track of what you have paid toward your maximum. Your plan sends you a statement each month showing your year-to-date out-of-pocket costs. You can also log into your plan's website or call the member services number on your insurance card to ask how much you have spent so far.

Frequently Asked Questions

Do all Medicare Advantage plans have an out-of-pocket maximum?

Yes, all Medicare Advantage plans must have an out-of-pocket maximum for in-network care. The maximum cannot exceed $10,000 in 2024, but plans can set it lower or at zero. Some plans have no out-of-pocket maximum, meaning you pay coinsurance indefinitely, though this is uncommon.

If I switch plans in the middle of the year, does my out-of-pocket spending carry over?

No. When you switch to a new plan, your out-of-pocket counter resets. Any money you spent toward your old plan's maximum does not count toward your new plan's maximum. This is one reason to be cautious about switching plans mid-year if you are close to reaching your maximum.

Does my out-of-pocket maximum include the monthly premium?

No. Your monthly premium is separate from your out-of-pocket maximum. The maximum only includes copays, coinsurance, and deductibles you pay for covered services. Premiums are what you pay to have the plan, regardless of whether you use it.

Can I choose a plan with a higher out-of-pocket maximum to save on premiums if I am healthy?

Yes, if you expect minimal medical costs, a plan with a higher out-of-pocket maximum and lower premium may cost you less overall. However, unexpected health events can happen. Compare the worst-case cost (premium plus maximum) against your expected costs before deciding.

What if I need care from an out-of-network provider and it counts toward a different out-of-pocket maximum?

Out-of-network costs count toward a separate out-of-pocket maximum, which is usually higher or unlimited. You will keep paying coinsurance for out-of-network care even after you reach your in-network maximum. Whenever possible, use in-network providers to protect yourself from this higher spending.