An out-of-pocket maximum is the highest amount you will spend on covered health care services during a plan year before your insurance begins paying 100% of remaining costs. This cap serves as financial protection against unexpectedly large medical bills. Whether this limit exists — and how it works — depends on the type of Medicare coverage you carry.
Original Medicare Does Not Include an Out-of-Pocket Limit
One of the most critical facts about Original Medicare (Part A and Part B) is that it has no out-of-pocket maximum. There is no annual ceiling on what you could spend.
Under Part B, you pay 20% coinsurance for most covered outpatient services after meeting your deductible. That 20% applies regardless of how high the bill climbs. If you undergo major surgery, a lengthy course of treatment, or require costly outpatient therapies, your 20% share can reach tens of thousands of dollars with no upper boundary.
Part A covers inpatient hospital stays with a per-benefit-period deductible ($1,736 in 2026) and daily copays for extended stays. Multiple hospital admissions in one year could mean paying the deductible more than once.
Without an out-of-pocket cap, Original Medicare beneficiaries face potentially unlimited cost exposure. This is a primary reason many people add supplemental coverage to Original Medicare.
Out-of-Pocket Limits in Medicare Advantage
Medicare Advantage plans (Part C) are required by federal law to include an annual out-of-pocket maximum, also called the Maximum Out-of-Pocket limit (MOOP). Once you hit this threshold during a plan year, the plan covers 100% of your covered services for the rest of the year.
For 2026, the Centers for Medicare and Medicaid Services (CMS) established the maximum allowable MOOP at:
- $9,250 for in-network services
- $13,300 for combined in-network and out-of-network services (for plans offering out-of-network coverage)
Individual plans may set their MOOP below these ceilings but cannot go above them. Many plans promote MOOPs ranging from $3,000 to $7,550 for in-network services, so there is considerable variation between plans.
What Counts Toward the MOOP
Not every health care dollar you spend applies toward reaching your out-of-pocket maximum. Knowing what is included helps you monitor your progress toward the cap.
Costs that typically count toward the MOOP:
- Deductibles
- Copays for doctor visits, hospital stays, and other covered services
- Coinsurance amounts
- Copays or coinsurance for covered Part D drugs (in some plans that combine medical and drug MOOP)
Costs that generally do not count:
- Monthly plan premiums (including your Part B premium)
- Charges for services not covered by the plan
- Out-of-network costs (in HMO plans that do not cover out-of-network care)
- Costs for non-formulary prescription drugs
Some Medicare Advantage plans maintain separate out-of-pocket limits for medical services and prescription drugs, while others merge them into a single MOOP. Consult your plan's Evidence of Coverage document for details.
How Medigap Addresses Cost Gaps
Medigap (Medicare Supplement Insurance) uses a different method to protect you from high costs. Instead of imposing an out-of-pocket maximum, Medigap plans pay for some or all of the cost-sharing that Original Medicare leaves to you.
For example:
- Medigap Plan G pays the 20% Part B coinsurance, Part A deductible, Part A coinsurance for extended hospital stays, skilled nursing facility coinsurance, and foreign travel emergency care. Your main remaining expense is the annual Part B deductible ($257 in 2026) plus your Medigap premium.
- Medigap Plan N offers similar benefits but charges small copays for some office and emergency room visits.
- Medigap Plan K pays 50% of certain cost-sharing amounts and includes its own out-of-pocket limit ($7,000 in 2026), after which it pays 100%.
- Medigap Plan L pays 75% of certain cost-sharing amounts with an out-of-pocket limit ($4,000 in 2026).
By covering the coinsurance and deductibles that Original Medicare leaves to you, Medigap plans effectively establish a predictable cost structure even though Original Medicare itself has no spending ceiling.
Evaluating Plan MOOPs
When shopping for Medicare Advantage plans, the out-of-pocket maximum should be a central consideration. Here are some factors to weigh:
- A lower MOOP means less financial exposure. A plan with a $3,400 in-network MOOP protects you sooner than one with a $7,500 MOOP. However, plans with lower MOOPs may charge higher copays or premiums, so evaluate the complete cost picture.
- In-network vs. out-of-network limits. If you use a PPO plan and visit out-of-network providers, the combined MOOP will be higher. HMO plans generally do not cover out-of-network care (except in emergencies), so only the in-network MOOP applies.
- Separate vs. combined drug MOOP. Some plans fold Part D drug costs into the overall MOOP, while others maintain a separate drug spending limit. If you take costly medications, a combined MOOP may offer stronger protection.
- Realistic cost modeling. Consider which services you are likely to use. If you are generally healthy, you may never approach the MOOP, and a plan with lower copays could save you more than one with a lower maximum. If you have a chronic condition or expect surgery, the MOOP becomes a vital safety net.
Shielding Yourself From High Costs
No matter which Medicare path you take, it is important to limit your financial exposure:
- If you select Original Medicare, strongly consider adding a Medigap plan to cover cost-sharing gaps.
- If you select Medicare Advantage, compare MOOPs across available plans and weigh them against premiums, copays, and network restrictions.
- Track your out-of-pocket spending throughout the year so you know when you are nearing your limit.
- Review your coverage each year during the open enrollment period to confirm your plan still delivers adequate protection for your anticipated health care needs.
Knowing how out-of-pocket limits work — and where they do not exist — is essential to making well-informed Medicare decisions and steering clear of financial surprises.