Medicare puts an annual cap on out-of-pocket expenses for enrollees with Medicare Advantage and Medigap plans. This is the maximum amount a person will have to pay out of pocket that year.
There is no out-of-pocket maximum for Original Medicare. However, people with Medicare Advantage or Medigap plans have a maximum amount to spend out of pocket. Once they reach that limit, they are no longer responsible for cost-sharing on covered services.
This amount can change each year.
Glossary of Medicare terms
We may use a few terms in this article that can be helpful to understand when selecting the best insurance plan:
- Out-of-pocket costs: An out-of-pocket cost is the amount a person must pay for medical care when Medicare does not pay the total cost or offer coverage. These costs can include deductibles, coinsurance, copayments, and premiums.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before an insurer starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, this is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Out-of-pocket expenses are the amounts people must pay for care and services when Medicare does not fully cover those services.
Medicare Advantage
Medicare Advantage plans have a yearly out-of-pocket limit. This limit applies to services covered under Part A (inpatient hospital care) and Part B (outpatient medical care). It does not include Part D (prescription drug) coverage costs.
Once a person reaches their plan’s out-of-pocket maximum, they will no longer be responsible for any of the costs for these types of services for the rest of the year. The out-of-pocket limit may vary between plans, as private insurance companies provide Medicare Advantage plans. However, out-of-pocket costs cannot exceed the maximum amount set by Medicare.
The 2024 out-of-pocket limits for Medicare Advantage plans are as follows:
- $8,850 for in-network services
- $13,300 for out-of-network and in-network services combined
Medigap
Medigap, or Medicare supplement insurance, is extra insurance that people can buy from private insurance companies. Medigap coverage can help pay for a person’s share of the costs from Original Medicare.
Medigap is available only to people who have Original Medicare plans.
Medigap premiums and deductibles can vary based on a person’s location and the insurance provider. However, some types of Medigap plans have an out-of-pocket limit each year.
The two Medigap plans that set out-of-pocket limits are Plan K and Plan L. The maximum out-of-pocket limits for these plans in 2024 are as follows:
- Plan K: $7,060
- Plan L: $3,530
Read about Original Medicare vs. Medicare Advantage.
Purpose of the out-of-pocket limit
Medicare sets the out-of-pocket limit in order to protect people from out-of-control or excess medical expenses that may come from a serious or long-term health condition.
Cost-sharing is the system in which a person pays for a certain amount of the cost of care and services and Medicare pays the rest.
Shared costs include copays, coinsurance, and deductibles. For example, once a person reaches their Part B deductible, they become responsible for 20% of the cost of care and services.
Generally, Medicare covers around 80% of the cost of approved services.
Out-of-pocket limits for Medicare Advantage and Medigap plans mean that once a person reaches that amount, they are no longer responsible for paying for any part of their care and services. For the rest of the year, Medicare will cover 100% of the cost.
Medicare premiums and deductibles can change each year. The costs for Medicare Advantage and Medigap plans will also vary based on location, coverage, and insurance provider.
The following table gives the 2024 Medicare costs at a glance:
| Medicare Part | 2024 out-of-pocket costs |
|---|---|
| Part A | • Premium: $0 for qualified individuals, $278 or $505 per month for others • Deductible: $1,632 for each hospital stay per benefit period • Hospital stay days 61 through 90: $408 per day • Hospital stay days 91 through 150: $816 per day while using reserve days • Hospital stay after day 150: all costs |
| Part B | • Premium: $174.70 per month for those with an income of $103,000 or less • Deductible: $240 • Coinsurance: 20% of services |
| Medicare Advantage (Part C) | • Premiums vary by plan, with an average monthly premium of $18.50. • Deductibles, coinsurance, and copayments vary by plan. • People must still pay the Part B premium. |
| Part D | Premiums vary by plan. |
| Medigap | • Premiums vary by location and policy. • People must still pay the Part B premium. |
People can use the Medicare search tool to find health and drug plans in their area.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare sets a yearly out-of-pocket expense limit for Medicare Advantage and Medigap plans. This is the maximum amount a person will spend out of pocket on care and services, including deductibles, copays, and coinsurance.
Once a person reaches this out-of-pocket limit, they are no longer responsible for paying for any part of their Medicare-approved services for the rest of the year.
Out-of-pocket costs vary by location and plan.