The Medicare out-of-pocket maximum

The short version

Original Medicare: uncapped

Parts A and B have no annual out-of-pocket maximum. Part A uses benefit periods that reset, so repeated hospital stays can stack deductibles. Part B's 20% coinsurance has no ceiling. A serious illness with months of treatment can produce an unlimited bill.

This is the structural reason most beneficiaries pair Original Medicare with Medigap. The combination effectively caps annual exposure at the Part B deductible plus Medigap premiums.

Medicare Advantage MOOPs

Things that don't count toward the MOOP:

• Part D prescription costs (tracked separately)
• Plan premium
• Services not covered by the plan
• Care from non-network providers on HMO plans (you pay full cost)

How Medigap solves the problem differently

Medigap doesn't use a cap; it pays the cost-sharing Original Medicare leaves you with. With Plan G, you pay the small Part B deductible once per year and Medigap covers virtually everything else under Original Medicare. With Plan N, you pay the Part B deductible plus modest office and ER copays.

Said differently: Advantage has a known worst case but variable spending up to it; Medigap has a known monthly cost and almost no variable spending. Different shape, same goal.

Compare Plan G and Plan N

The Part D cap (IRA)

The Inflation Reduction Act created an annual out-of-pocket cap on Part D drug spending. This is a major change — before, high-drug-spend enrollees faced effectively unlimited annual exposure on prescriptions. The cap applies to both standalone Part D plans and the drug portion of MAPDs.

Part D MOOP is tracked separately from your medical MOOP. A Medicare Advantage enrollee can hit both caps in the same year and have both medical and drug spending covered at 100% for the remainder of the year.

Picking based on worst-case math

Total worst-case spending = premiums (medical + Part D) + medical MOOP + Part D MOOP. Compare that across Advantage and Medigap options. Medigap usually wins on worst case for people who will likely use care heavily; Advantage usually wins on best case for people who use little care.

Frequently asked questions

Does Original Medicare have an out-of-pocket maximum?

No. Original Medicare (Parts A and B) has no annual cap on what you can pay in deductibles, coinsurance, and copays. This is the main reason most people add either Medigap or a Medicare Advantage plan, both of which limit your exposure in different ways.

What is the Medicare Advantage out-of-pocket maximum?

Every Medicare Advantage plan must cap your annual in-network medical out-of-pocket spending. CMS sets a federal maximum; plans can offer lower caps. PPO plans have a separate, higher combined in- and out-of-network cap. Prescription drug costs are tracked separately under Part D.

How does Medigap limit my exposure?

Medigap doesn't use an out-of-pocket maximum. Instead, it pays most of the cost-sharing Original Medicare leaves you with. With Plan G or Plan N, your annual exposure is effectively the Part B deductible plus the Medigap premium, regardless of how much care you use.

Does the out-of-pocket max include prescriptions?

Not on the medical side. Part D has its own annual out-of-pocket cap, separate from your MA plan's medical MOOP. The Inflation Reduction Act capped Part D out-of-pocket spending starting in 2025, which materially improved this for high-drug-spend enrollees.

What counts toward the out-of-pocket maximum?

Deductibles, copays, and coinsurance for covered services from in-network providers. Premiums don't count. Penalties don't count. Services not covered by your plan don't count. The exact list is in your plan's Evidence of Coverage.