Medicare Out-of-Pocket Maximum in 2024

by David Bynon, last updated

Unlike Medicare Advantage Plans, Original Medicare (Part A and B) has no maximum out-of-pocket limit. To limit costs, you need a Medigap Plan.

This article will dissect what Medicare covers, its out-of-pocket costs, and how to get more financial protection.

Key Takeaways

  • Original Medicare does not have an out-of-pocket maximum.
  • Medicare Advantage Plans must set an annual maximum out-of-pocket (MOOP) limit for all Part A and Part B in-network services.
  • The out-of-pocket limit does not include monthly premiums or prescription drug costs.
  • Medicare Part D plans also have maximum out-of-pocket limits: Initial Coverage Limit and the Catastrophic Coverage Threshold.
  • Beneficiaries can buy a Medicare Supplement (Medigap plan) to get more protection with Original Medicare.

What is MOOP in Medicare?

The maximum out-of-pocket (MOOP) limit is the most money a Medicare Advantage insurance plan can charge enrollees for healthcare services in a calendar year for in-network services or combined in- and out-of-network services. This year the most an insurance company can charge for in-network services is $8,550.

For instance, if you enroll in an HMO plan and receive $3,500 of in-network, Medicare-approved services. But you also had $500 in out-of-network services and $750 in routine dental care. Only the $3,500 in-network services count toward your MOOP in the plan year.

In this same scenario, if you were in a PPO plan, Medicare-approved out-of-network services would also be included.

MOOP does not apply to Original Medicare. Part A and Part B do not have an annual limit. It also does not apply to Medicare Part D prescription drug plans, which use a different system to calculate annual limits and thresholds.

What Does the Medicare Out-of-Pocket Maximum Cover?

If you are new to Medicare, it’s easy to confuse what the out-of-pocket maximum covers. The confusion stems from how Medicare organizes its benefits:

  • Part A is hospital insurance. It has a benefit period deductible as well as a daily coinsurance. There is no limit to the number of benefit period deductibles in a year.
  • Part B is medical insurance. It has an annual deductible and a 20% coinsurance. There is no limit on the amount of coinsurance a beneficiary can be charged.
  • Part C (Medicare Advantage) is a private health plan. Each plan sets its own deductibles, copayments, and coinsurance. Each plan sets its maximum out-of-pocket (MOOP) limit, which cannot exceed the limit set by Medicare.
  • Part D is a private prescription drug plan. Each plan sets its deductible, copayment, and coinsurance. However, multiple phases lead to the annual maximum, the catastrophic coverage phase.

As previously mentioned, Medicare Part A and Part B do not have an out-of-pocket maximum. So, additional coverage is essential.

Every Medicare Advantage plan must set a maximum out-of-pocket limit for their health plan. This year’s limit on in-network services is $8,550.

Medicare Part D plans also have limits, but they work differently. The most important limit is the Initial Coverage Limit (ICL). This year the ICL is $5,030 in retail spending. When the retail cost of your prescriptions reaches this amount, you go into the Part D coverage gap (aka, “donut hole”). You don’t get out of the coverage gap until retail spending on your medications reached the Catestropic Coverage Threshold ($8,000).

What Does the Medicare Out-of-Pocket Maximum Not Cover?

Above, you learned that health and drug plans have their own out-of-pocket maximum limit. There are multiple limits if you have a Medicare Advantage plan that includes prescription drug coverage. The health plan has in-network and combined in/out-of-network limits. And the prescription drug plan has its limits.

The out-of-pocket maximum only applies to Part A and Part B services. If your health plan has extra benefits not covered by Medicare Part A or Part B, such as routine dental, vision, and hearing, these costs are not part of the calculation.

Also, the out-of-pocket maximum does not include your Part B premiums or the monthly premiums for your Medicare Advantage Plan.

The Out-of-Pocket Risk of Original Medicare

Original Medicare is very similar to private insurance. It has monthly premiums and costs you pay when you use healthcare services (deductibles, copayments, and coinsurance). However, as explained, it does not have annual limits.

This creates a serious financial risk.

To help you understand the risk, we have outlined the costs in Original Medicare when you use healthcare services.

Medicare Part A Deductible

Medicare Part A has an inpatient benefit period deductible. It covers most of your hospitalization costs for the first 60 days. However, each time you are hospitalized you will pay the deductible. This year the deductible is $1,632 per benefit period.

Medicare Part A Coinsurance

If you are hospitalized for more than 60 days, you will pay a coinsurance. Here’s what it costs:

  • $408 per inpatient day, days 61-90 of the benefit period.
  • $816 per inpatient day for day 91 and beyond of the benefit period.
  • $204 per day for skilled nursing facility care (day 21 – day 100). Medicare Part A covers 100 percent of the cost of skilled nursing facility care for the first 20 days, so long as you have at least a three-night inpatient hospital stay before the skilled nursing facility stay.
  • There are also a finite number of days that Medicare will cover, called Lifetime Reserve Days. These are additional days that Medicare will pay for when you’re in a hospital for more than 90 days. You have 60 reserve days that can be used during your lifetime.

Medicare Part B Deductible

Part B has an annual deductible for all medical expenses, including doctor visits, tests, supplies, and durable medical equipment. The deductible this year is $240. If you receive a Part B-covered service during the year, you will pay all costs out-of-pocket until the Part B deductible is met.

Medicare Part B Coinsurance

After paying your Part B deductible, you pay 20% coinsurance on all Medicare-approved Part B services. Your doctor may charge you up to 15% more for Part B services if they don’t accept Medicare assignment. These costs, called excess charges, are billed to you directly by your healthcare provider.

How To Add An Out-of-Pocket Maximum to Original Medicare

As you can see from the Part A and B costs outlined above, Original Medicare is a risky proposition without additional coverage.

Buy a Medigap plan to control your out-of-pocket costs with Original Medicare. These policies, also known as Medicare Supplements, cover the cost gaps, including deductibles, coinsurance, and copayments. There are a total of ten coverage options.

The two most popular plans for new Medicare beneficiaries are Medigap Plan G and Medigap Plan N. You must work with a licensed insurance agent to enroll in one of these plans.

Also See: Medicare Plan N vs Plan G: Which Supplement is Best for You?

Do Medigap Plans Have an Out-of-Pocket Max?

Two Medigap plans, Plan K and Plan L, have an out-of-pocket limit. Once you reach the annual limit, the plan covers 100% of all Medicare-approved costs. The following chart shows the Medicare coverage provided by all 10 plans:

Medicare Supplement Plans Comparison Chart for 2024

There are also two high-deductible plans. Once you reach the annual deductible on a high deductible Plan F or Plan G policy, they begin paying all Medicare-approved costs.

What is the Difference Between Medicare Supplement Insurance and Medicare Advantage?

Since the inception of the Medicare program, the Centers for Medicare & Medicaid Services (CMS) has regulated and promoted Medigap plans to help beneficiaries reduce their healthcare costs. Supplemental insurance pays some or all of Part A and Part B deductibles, coinsurance, and copayments.

Medigap plans work in conjunction with Medicare Part A and Medicare Part B. With one exception, foreign travel emergency coverage, Medicare Supplements can’t offer additional benefits.

Medicare Advantage plans don’t work in conjunction with Original Medicare, they replace it. If you join a Medicare Advantage plan, you receive all of your Medicare Part A and Part B benefits through your plan.

There’s an important cost difference that needs to be pointed out and highlighted. With both Original Medicare and Medicare Advantage plans, you pay about 20% of your health care costs. Although Medicare Advantage plans cap your annual costs, they don’t pay more of your costs until you hit the plan’s maximum.

Medigap plans do.

A Medigap plan pays your out-of-pocket expenses, up to the limits of the plan, and it caps your annual costs. The best way to understand and compare Medigap insurance is to look at a chart:

Medicare Supplement Plans Comparison Chart for 2024

How Much Does Medicare Advantage Cost?

Like Original Medicare, Medicare Advantage Plans also have costs when using healthcare services. However, Medicare Advantage Plan costs are not standardized.

Some plans have an annual deductible. Others don’t.

Some plans charge a copayment when you see your primary care doctor. Some don’t.

Some plans charge extra when you use an out-of-network provider. Some won’t cover the service at all.

Some plans charge a per-day copayment (flat feet) for inpatient care. Other plans charge coinsurance (percentage).

You can compare Medicare Advantage plans with our plan finder tool. We offer downloadable PDFs with costs on all plans.

NOTE: Some Medicare Advantage plans have a zero-dollar monthly premium. These zero-premium Medicare plans are not free. The zero-dollar premium simply means your Part B monthly premium covers the plan’s full cost. However, these plans often have the highest out-of-pocket costs.

What If I Can’t Afford the Medicare Out-of-Pocket Maximums?

People with limited income and resources can qualify for both Medicare and Medicaid. When you do, many new benefits become available to you.

Most of your out-of-pocket costs will be covered through Medicaid and Medicare Savings Programs. It’s like having the best Medigap plan available without having a monthly premium.

If you choose and plans are available in your area, you can enroll in a dual-eligible Medicare Special Needs Plan (D-SNP). These are Medicare Advantage plans specifically tailored to individuals with both benefits.

You can compare Medicare Special Needs Plans using our plan finder tool.

Find Plans in your area with your ZIP Code


It’s important to choose your Medicare enrollments wisely. Understanding the various out-of-pocket costs built into each part of Medicare will help you choose the best options and budget for your share of the costs.

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