Medicare Part A and Part B Have No Annual Out-of-Pocket Cap

Original Medicare (Part A and Part B) does not have an annual out-of-pocket maximum. This means there is no dollar amount at which Medicare stops requiring you to pay your share of costs for the rest of the year. You will continue to owe coinsurance and copayments for covered services for as long as you receive them, no matter how much you have already spent.

Part A (hospital insurance) requires you to pay a deductible each time you are admitted to the hospital — currently $1,676 per benefit period — plus coinsurance for days 61 through 90 of a hospital stay and beyond. Part B (medical insurance) has an annual deductible, after which you typically pay 20 percent coinsurance for most services. Neither program caps what you owe in a calendar year.

This is one of the largest financial risks in Original Medicare. A person with a serious illness or injury can face thousands of dollars in out-of-pocket costs in a single year with no protection against further bills.

Key Takeaways

  • Original Medicare has no annual out-of-pocket maximum, so you can owe unlimited coinsurance and copayments throughout the year.
  • Medicare Advantage plans must have an out-of-pocket maximum by law, usually between $6,700 and $10,000 per year, after which the plan covers 100 percent of in-network costs.
  • Medigap (supplemental insurance) can cover some or all of the coinsurance and copayments that Original Medicare leaves unpaid, effectively creating a spending cap.
  • The out-of-pocket maximum amounts change each year and vary by plan, so you must check your specific plan documents to know your actual limit.
  • Costs that count toward an out-of-pocket maximum differ between Original Medicare, Medigap, and Medicare Advantage — not all out-of-pocket spending counts the same way.

How Medicare Advantage Plans Cap Your Spending

Medicare Advantage (Part C) plans are required by federal law to have an annual out-of-pocket maximum. Once you reach this limit in a calendar year, the plan pays 100 percent of the cost of in-network covered services for the rest of that year. The maximum varies by plan and by year, but typically falls between $6,700 and $10,000 for in-network care.

The out-of-pocket maximum includes deductibles, copayments, and coinsurance you pay for in-network services. It does not include premiums, costs for out-of-network care (unless you are in an emergency), or services not covered by your plan. Once you hit the limit, you stop paying for covered in-network services, but you remain responsible for any out-of-network bills.

Each Medicare Advantage plan sets its own maximum within federal guidelines. A plan with a lower premium might have a higher out-of-pocket maximum, and vice versa. You must review your plan's summary of benefits to know the exact number.

Medigap Plans and How They Reduce Your Out-of-Pocket Costs

Medigap (supplemental insurance) does not have an out-of-pocket maximum in the traditional sense, but it works differently from Medicare Advantage. Instead of capping your total spending, Medigap covers specific costs that Original Medicare leaves unpaid — typically coinsurance, copayments, and the Part B deductible, depending on which Medigap plan you choose.

For example, a Medigap Plan G covers the Part B deductible and 100 percent of Part B coinsurance. If you have Plan G, you will never pay coinsurance on a doctor visit or outpatient service covered by Part B. However, you are still responsible for Part A deductibles and coinsurance for hospital stays, unless your Medigap plan covers those too.

The benefit of Medigap is predictability: you know exactly which costs are covered and which are not. The trade-off is that Medigap premiums are often higher than Medicare Advantage premiums, and you must pay the Medigap premium regardless of how much medical care you use.

What Counts Toward an Out-of-Pocket Maximum

The definition of "out-of-pocket" varies depending on which type of Medicare coverage you have. In a Medicare Advantage plan, your out-of-pocket maximum includes deductibles, copayments, and coinsurance for in-network covered services. It does not include your monthly premium, dental or vision care (unless your plan covers those separately), or any costs you owe for out-of-network care.

In Original Medicare with Medigap, there is no single out-of-pocket maximum, but your Medigap plan covers specific costs. What you actually pay out of pocket depends on which Medigap plan you have chosen. Some plans cover nearly all coinsurance and copayments; others cover only a portion.

Costs that never count toward any out-of-pocket maximum include your Medicare premiums (Part B, Part D, or Medicare Advantage), any services Medicare does not cover at all, and any amounts you owe above what Medicare allows as a reasonable charge.

Out-of-Pocket Maximums Change Each Year

Medicare Advantage out-of-pocket maximums are set by each plan and can change from year to year. The federal government sets a maximum limit that plans cannot exceed, but individual plans often set lower limits. These amounts are announced in the fall, and the new limits take effect on January 1.

If you are enrolled in a Medicare Advantage plan, your plan documents or the plan's website will show your current out-of-pocket maximum. You can also call the plan directly to confirm the exact amount. Do not assume your limit is the same as it was last year.

Original Medicare deductibles and coinsurance amounts also change annually, though there is no cap on what you might owe. The Part A deductible and Part B deductible are adjusted each year based on inflation.

Original Medicare Plus Medigap Versus Medicare Advantage

If you want an out-of-pocket maximum with Original Medicare, you need to add a Medigap plan. Original Medicare alone offers no spending cap. The combination of Original Medicare and Medigap can provide more predictable costs than Medicare Advantage, but Medigap premiums are often higher, and you will pay both your Medicare Part B premium and your Medigap premium.

Medicare Advantage bundles hospital, medical, and prescription drug coverage into one plan with a single out-of-pocket maximum. This can be simpler to understand and may cost less in premiums, but you are limited to in-network providers unless it is an emergency. If you travel frequently or have a preferred doctor outside the plan's network, Medicare Advantage may not work for you.

The choice between the two depends on your health, your doctors, your budget, and how much financial predictability matters to you. There is no universally better option — only the option that fits your situation.

How to Find Your Plan's Out-of-Pocket Maximum

If you are in a Medicare Advantage plan, your out-of-pocket maximum is listed in your plan's Summary of Benefits and Coverage, which you receive when you first enroll and again each fall during the annual enrollment period. You can also find this information on your plan's website or by calling the plan's customer service number, which is on your insurance card.

If you have Original Medicare with Medigap, ask your Medigap insurer which costs are covered under your specific plan. The Medigap plan letter (A, B, D, G, K, L, M, or N) determines what you pay out of pocket, so knowing your plan letter is the first step.

If you are comparing plans during the annual enrollment period (October 15 to December 7), the Medicare Plan Finder tool on Medicare.gov allows you to enter your prescriptions and doctors to see estimated out-of-pocket costs for different plans in your area. This can help you compare the true cost of each option.

Frequently Asked Questions

Can I switch from Original Medicare to Medicare Advantage to get an out-of-pocket maximum?

Yes. You can switch to a Medicare Advantage plan during the annual enrollment period (October 15 to December 7) or if you have a may have access to life event. Once you enroll in Medicare Advantage, you will have an out-of-pocket maximum. However, you will lose Original Medicare coverage and must use the plan's network of doctors and hospitals.

What happens to my out-of-pocket maximum if I use out-of-network doctors in Medicare Advantage?

Out-of-network costs do not count toward your in-network out-of-pocket maximum in most Medicare Advantage plans. You may owe the full cost of out-of-network care, or the plan may cover it at a higher coinsurance rate. Always check your plan documents to understand out-of-network coverage.

Does my Part D prescription drug plan have its own out-of-pocket maximum?

Yes. Part D plans have a separate out-of-pocket maximum for prescription drugs, usually between $6,000 and $7,000 per year. Once you reach this limit, the plan covers most of your remaining drug costs. This maximum is separate from any medical out-of-pocket maximum you may have.

If I have Medigap Plan G, do I have an out-of-pocket maximum?

No, not in the traditional sense. Plan G covers the Part B deductible and 100 percent of Part B coinsurance, so you will not owe those costs. However, you are still responsible for Part A deductibles and coinsurance for hospital stays, and you must pay your Medigap premium every month regardless of use.

Will my out-of-pocket maximum protect me from very high medical bills?

In Medicare Advantage, yes — once you hit the limit, the plan covers 100 percent of in-network costs for the rest of the year. In Original Medicare alone, no — there is no limit. With Medigap, it depends on your plan; some plans cover nearly all costs, while others leave you responsible for certain expenses.