Yes, Medicare Part B has an out-of-pocket maximum, but it works differently than you might expect

Medicare Part B does have an out-of-pocket spending limit, but unlike private insurance, it does not cap your costs at a fixed dollar amount each year. Instead, once you reach a certain threshold of spending on Part B services, Medicare pays 80 percent of approved charges and you pay 20 percent for the rest of the calendar year. The threshold is based on the Part B deductible, which changes each year. For 2024, the Part B deductible is $240. After you meet that deductible, you pay 20 percent coinsurance on most services with no upper limit.

This means your actual out-of-pocket costs depend on how much medical care you use and what services you receive. Someone with one doctor visit might spend $240 plus 20 percent of that visit's cost. Someone with ongoing treatment for a chronic condition could spend thousands. There is no point at which Medicare says "you have paid enough this year" and covers 100 percent of your bills.

Key Takeaways

  • The Part B deductible for 2024 is $240, and you must pay this before Medicare's 80/20 cost-sharing begins.
  • After you meet the deductible, you pay 20 percent coinsurance on most Part B services with no annual maximum.
  • The deductible and coinsurance amounts change each year, so check the current figures before budgeting for healthcare costs.
  • Medigap supplemental insurance and Medicare Advantage plans can limit your out-of-pocket costs in ways Original Medicare cannot.

How the Part B deductible works each year

You pay the full cost of Part B services until you have spent $240 out of pocket on covered services (the 2024 deductible amount). This deductible resets on January 1 each year. Once you have paid $240, Medicare begins to pay its share — typically 80 percent — and you pay the remaining 20 percent as coinsurance.

The deductible applies to most Part B services: doctor visits, outpatient surgery, diagnostic tests, and mental health visits. It does not explore to preventive services like annual wellness visits, cancer screenings, or flu shots. Those are covered at no cost to you once you are enrolled in Part B.

If you have not met your deductible by December 31, the unused portion does not carry over. The counter resets to zero on January 1, and you start paying the full cost of services again until you reach the new year's deductible.

The 20 percent coinsurance that has no cap

After you meet the deductible, Medicare covers 80 percent of the approved amount for most Part B services, and you pay 20 percent. Unlike a private insurance plan with an out-of-pocket maximum, this 20 percent coinsurance continues all year with no upper limit. If you need expensive treatment — such as extended physical therapy, multiple specialist visits, or ongoing imaging — your 20 percent share can add up quickly.

The 20 percent is calculated on Medicare's approved amount, not what a provider charges. If a doctor charges $500 but Medicare approves $400, you pay 20 percent of $400 ($80), not 20 percent of $500. This is why understanding the difference between a provider's charge and Medicare's approved amount matters for your budget.

Services with different cost-sharing rules

Not all Part B services follow the deductible-then-20-percent pattern. Some have their own rules:

  • Mental health visits: Subject to the Part B deductible, then 20 percent coinsurance.
  • Outpatient hospital services: May have a copay instead of coinsurance, depending on the service.
  • Durable medical equipment: Subject to the deductible, then 20 percent coinsurance.
  • Preventive services: No deductible, no coinsurance — covered at no cost.
  • Dialysis: Covered under Part B with specific cost-sharing rules that differ from standard services.

Your provider or Medicare can tell you the exact cost-sharing for a specific service before you receive it. Asking ahead of time helps you budget and avoid surprises.

How Medigap and Medicare Advantage change your out-of-pocket costs

Original Medicare's lack of an out-of-pocket maximum is why many people buy Medigap supplemental insurance. Medigap plans are sold by private insurers and designed to cover costs that Original Medicare does not — including the 20 percent coinsurance. Depending on which Medigap plan you choose, your coinsurance could be covered partially or fully, which gives you a predictable out-of-pocket maximum.

Medicare Advantage plans (Part C) work differently. These are all-in-one plans run by private insurers that include Part A and Part B coverage. Most Medicare Advantage plans do have an out-of-pocket maximum — typically between $5,000 and $7,000 per year, though this varies by plan and year. Once you reach that maximum, the plan covers 100 percent of covered services for the rest of the year. However, Medicare Advantage plans often have higher copays and coinsurance for individual services, and they may require you to use doctors and hospitals within their network.

If you are on Original Medicare without Medigap, you should budget for the possibility of significant out-of-pocket costs, especially if you have a chronic condition that requires frequent care.

What happens if a provider charges more than Medicare approves

If you see a provider who does not accept Medicare's approved amount as full payment, you could owe more than the 20 percent coinsurance. Non-participating providers can charge up to 15 percent more than Medicare's approved amount. You would pay the 20 percent coinsurance on the approved amount, plus the extra 15 percent on top — meaning your actual cost could be 35 percent or more.

Before scheduling a service with a provider, ask whether they are a participating provider (accepts Medicare's approved amount) or non-participating. You can also check the Medicare provider directory online. Participating providers are required to accept Medicare's approved amount as full payment, so your costs are limited to the deductible and 20 percent coinsurance.

How to plan your Part B budget

Start by knowing the current year's deductible — for 2024 it is $240, but it increases most years. Budget for that amount in January or whenever you first use a Part B service. Then estimate how many doctor visits, tests, or treatments you expect during the year and calculate 20 percent of the approved costs. Your doctor's office or a Medicare representative can give you the approved amount for a specific service.

If you have a chronic condition requiring ongoing care, ask your doctor's office to estimate your annual Part B costs. This helps you decide whether Original Medicare alone is affordable for you, or whether buying Medigap or switching to Medicare Advantage makes sense. These decisions are usually made during the annual enrollment period (October 15 to December 7), so plan ahead.

Keep records of what you have paid toward the deductible each year. Some providers' billing statements show this, but not all. Tracking it yourself prevents overpaying if you see multiple providers.

Frequently Asked Questions

Does the Part B deductible explore to preventive care?

No. Preventive services like annual wellness visits, cancer screenings, vaccinations, and certain blood tests are covered at no cost with no deductible. You only pay the deductible for diagnostic or treatment services.

What if I switch from Medicare Advantage back to Original Medicare mid-year?

Your Part B deductible resets when you switch. If you had already met the deductible under Medicare Advantage, you start over with Original Medicare. This is one reason to plan enrollment changes carefully — switching mid-year can cost you more out of pocket.

Can I see any doctor on Original Medicare, or do I have to use a network?

You can see any doctor who accepts Medicare, regardless of location. There is no network restriction with Original Medicare. However, you pay more if the doctor is non-participating and charges above Medicare's approved amount.

Does my Part B deductible count toward a Medigap plan's costs?

It depends on the Medigap plan. Some plans cover the Part B deductible; others do not. Check your specific plan's coverage details, or ask your insurance agent which plans cover the deductible in your state.

What is the difference between the Part B deductible and the Part A deductible?

Part A (hospital insurance) and Part B (medical insurance) have separate deductibles. The Part A deductible for 2024 is $1,632 per hospital stay. Part B's deductible is $240 per year. You must meet both if you use both types of services.