Medicare Out-of-Pocket Maximum

Original Medicare has no out-of-pocket maximum

Unlike employer or marketplace plans, Original Medicare has no annual out-of-pocket maximum. After you meet the $283Part B deductible, you keep paying 20% coinsurance on covered services with no ceiling, and Part A hospital costs apply per benefit period. For a healthy year that is manageable, but a single serious diagnosis — cancer treatment, a long hospital stay, ongoing therapy — can generate tens of thousands of dollars in 20% shares with nothing to stop the meter.

Why the missing cap matters

This is the single biggest financial risk in Medicare. Because there is no backstop, your exposure is technically unlimited. That uncertainty is exactly why most people do not stay on Original Medicare alone — they choose one of two ways to add protection.

Option 1: Medigap makes costs predictable

A Medigap (Medicare Supplement)policy fills the gaps Original Medicare leaves — the deductibles and coinsurance — in exchange for a monthly premium. With a comprehensive plan, your costs become highly predictable and low, regardless of how much care you need. Medigap does not have a single published out-of-pocket maximum because, with the gaps covered, you rarely face large bills in the first place.

Option 2: Medicare Advantage includes an annual limit

Every Medicare Advantage plan must include an annual in-network out-of-pocket maximum, in the low-$9,000s, set each year by CMS. Once you hit it, the plan pays 100% of your remaining in-network Part A and B costs for the rest of the year. The trade-off is that you generally use the plan’s network and may need referrals or prior authorization.

Drugs now have their own cap

Prescription costs used to be open-ended too, but that has changed. Part D out-of-pocket spending is now capped at $2,000 per year (introduced in 2025 and indexed up annually), and insulin is limited to $35 per month. See the Medicare costs hub and deductibles and copays for the full picture.