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Medicare Maximum Out-of-Pocket


Original Medicare coverage helps alleviate your healthcare costs. However, it does not cover everything. When enrolling in Original Medicare, it is essential to review your spending limits to understand if your coverage is right for your budget. For many, it may come as a surprise that Original Medicare (Medicare Part A and Part B) does not have a maximum out-of-pocket limit.

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A Medicare maximum out-of-pocket limit is only available if you enroll in supplemental coverage, like a Medicare Supplement plan or a Medicare Advantage plan. Without a maximum out-of-pocket, you will be responsible for a portion of your healthcare expenses, regardless of the cost. However, there are several solutions to help you save money on out-of-pocket costs.

Below, we review the Medicare maximum out-of-pocket and how to avoid paying more than necessary for your health care.

What is the Maximum Out-of-Pocket for Medicare?

Original Medicare does not have a limit on the amount you can spend out-of-pocket on healthcare. But it covers a portion of most medical bills. Once you meet the Medicare Part B deductible, you must cover 20% of your healthcare costs through the end of the year.

However, some Medicare plan options outside of Original Medicare offer out-of-pocket maximums that can put a cap on your healthcare spending. Depending on the plan you choose, you may be responsible for an additional monthly premium. Yet, this premium is often less than the cost you would be spending out-of-pocket without the extra coverage in place.

Ultimately, adding extra coverage to your health insurance arsenal allows you access to additional benefits at a fraction of the cost.

What is the Medicare Advantage Maximum Out-of-Pocket?

Medicare Part C (Medicare Advantage) plans are different from Original Medicare. When you enroll in a Medicare Advantage policy, it becomes the primary payer. Medicare Part C plans can offer unique benefits that are unavailable through Original Medicare.

Medicare Advantage plans offer a maximum out-of-pocket limit to help reduce your out-of-pocket spending with the coverage. However, it is essential to carefully review your plan’s out-of-pocket costs and understand the limitations of the coverage before enrolling.

The maximum out-of-pocket limits on Medicare Advantage plans vary. Still, they never exceed the limit for the year that the Centers for Medicare & Medicaid Services (CMS) sets. Additionally, there are different limits when receiving care in-network versus out-of-network.

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Once you reach your plan’s maximum out-of-pocket limit, your plan will cover 100% of your approved Medicare healthcare costs for the remainder of the calendar year.

What Costs Count Towards the Medicare Advantage Maximum Out-of-Pocket?

Medicare Advantage plans allow the costs for the following services to count towards the plan’s maximum out-of-pocket:

  • Doctors’ visits
  • Emergency room visits
  • Hospital stays
  • Outpatient services
  • Durable medical equipment
  • Skilled nursing facilities
  • Home health care
  • Laboratory and diagnostic imaging

In addition to the above services, any fees you pay for additional services that Original Medicare typically covers count towards your maximum out-of-pocket limit. Yet, any expense you incur that does not receive Medicare coverage does not apply towards your maximum out-of-pocket. This includes Medicare prescription drug costs and monthly premiums.

Do Medicare Supplement Plans have an Out-of-Pocket Maximum?

Most Medicare Supplement (Medigap) plans do not have a maximum out-of-pocket because it is unnecessary due to the benefits they provide. Medigap plans cover most of the costs Original Medicare leaves behind, so putting a limit on out-of-pocket expenses is unnecessary.

However, Medicare Supplement Plan K and Plan L have maximum out-of-pocket limits because they are cost-sharing plans that do not cover 100% of your costs.

Medicare Out-of-Pocket Maximum Limits

As discussed, each Part of Medicare has its own out-of-pocket limit when utilizing coverage. The chart below compares all Parts of Medicare and their maximum out-of-pocket spending limits.

Medicare Part A There is no out-of-pocket maximum with Medicare Part A. Medicare Part A costs include a $0 premium for most enrollees, copayments, and a deductible.
Medicare Part B There is no out-of-pocket maximum with Medicare Part B. Medicare Part B costs include a monthly premium, an annual deductible, and 20% coinsurance once you meet the deductible.
Medicare Part C Medicare Part C (Medicare Advantage) plans set a maximum out-of-pocket limit. However, each plan may set its own costs determined by the insurance company offering the plan. Medicare Part C costs include a premium, annual deductible, copays, and coinsurance.
Medicare Part D Medicare Part D plans do not set a maximum out-of-pocket limit. Once you reach the catastrophic coverage phase of your drug plan, you are still responsible for up to 5% of your prescription drug costs. However, in 2025 the Medicare Part D maximum out-of-pocket limit will be $2,000.
Medicare Supplement Insurance Specific Medicare Supplement plans do set a maximum out-of-pocket limit. Each lettered Medicare Supplement plan offers slightly different benefits, so your total out-of-pocket costs can vary based on your plan. However, not all Medigap plans offer an out-of-pocket limit. So, it is essential to understand your plan’s benefits before enrolling in coverage.

What Happens After the Medicare Maximum Out-of-Pocket is Met?

Once you meet your plan’s maximum out-of-pocket spending limit, you will be covered at 100% for any healthcare services you require for the rest of the calendar year. Each year on January 1, your maximum out-of-pocket limit will reset regardless of whether you change plans or stay on the same coverage.

Remember, once you meet the out-of-pocket maximum, you are still responsible for any costs Original Medicare does not cover. These can include vision, dental, hearing, or prescription drug services.

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How to Learn More About Medicare Out-of-Pocket Costs

Navigating Medicare coverage options can be challenging without the right team by your side. At MedicareFAQ, our licensed agents help you find the right coverage for your healthcare needs without breaking the bank.

We help you compare all the top plans and carriers in your area to help you find the perfect match.

To review your personalized side-by-side plan comparison, and to learn more about your Medicare out-of-pocket maximum, call the number above or complete our online rate form today!

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Sources:

MedicareFAQ is dedicated to providing you with authentic and trustworthy Medicare information. We have strict sourcing guidelines and work diligently to serve our readers with accurate and up-to-date content.

  1. Medicare Advantage Out-of-Pocket Limits, KFF. Accessed November 2022.
    https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2022-premiums-out-of-pocket-limits-cost-sharing-supplemental-benefits-prior-authorization-and-star-ratings/
  2. Medicare Costs, Medicare. Accessed November 2022.
    https://www.medicare.gov/basics/costs/medicare-costs
  3. Medicare Part C Costs, NCOA. Accessed November 2022.
    https://www.ncoa.org/article/medicare-advantage-medicare-part-c-costs

Jagger Esch

Jagger Esch is the Medicare expert for MedicareFAQ and the founder, president, and CEO of Elite Insurance Partners and MedicareFAQ.com. Since the inception of his first company in 2012, he has been dedicated to helping those eligible for Medicare by providing them with resources to educate themselves on all their Medicare options. He is featured in many publications as well as writes regularly for other expert columns regarding Medicare.

5 thoughts on “Medicare Maximum Out-of-Pocket

  1. This is not good information. You make no mention of the fact that most Advantage plans have a $0 premium, whereas the average premium for a Medigap is $200 or more a month, PLUS your Part B premium, PLUS you have to purchase separate drug coverage, PLUS they don’t include Dental, Vision and Hearing. Many Advantage plans have a max out of pocket of less than $3,000, and as low as $1,200. And yes, they don’t cover out-of-network, but why would the average person need that? Just visit your doctors in-network…. And if your Primary Care physician tells the plan that it’s medically necessary to see a particular out-of-network doctor, the plan can make an exception. This article seems heavily biased towards Medigap plans without considering that Advantage plans can be more appropriate for many people.

    1. Hi Benjamin! I appreciate your feedback. Perhaps one of our other articles on Medicare Advantage plans will help you understand why they are not a good fit for most Medicare beneficiaries. To address your points above… the premium for Medigap plans depends on the letter plan you choose. They average anywhere between $50-$300 a month. You have to pay the premium for Part B to enroll in either a Medigap plan or a Medicare Advantage plan regardless. There is no out-of-pocket maximum with Medigap plans because you don’t need one. You will spend more out of pocket (copays, coinsurance, deductibles) with a Medicare Advantage plan as you use the benefits than you would in monthly premiums for a Medigap plan. Especially if you get diagnosed with a serious illness or condition. Many people travel when they are retired, Medicare Advantage plans don’t travel with you, Medigap plans do. They will even provide you with emergency coverage outside the U.S. The biggest complaint we hear with Medicare Advantage is regarding the dental benefits, not only are the benefits very limited, most dentists do not accept Medicare Advantage plans. Yes, Medicare Advantage plans are appropriate for some individuals, but not most. There are a lot of other factors to consider outside of networks and MOOP limits when it comes to deciding between Medicare Advantage and Medigap.

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