Key takeaways
- Original Medicare (parts A and B) does not have an out-of-pocket maximum, which means there’s no limit to what you might pay in a year for covered services.
- The federal government sets a maximum out-of-pocket (MOOP) limit that Medicare Advantage plans must not exceed. In 2025, the Medicare Advantage MOOP was $9,350, but plans can set lower limits to protect people from high costs. The 2026 maximum out-of-pocket amount has not yet been announced.
- Medicare Part D prescription drug plans have an out-of-pocket limit of $2,100 in 2026, after which a person will pay nothing for eligible take-home prescription medications for the remainder of the calendar year. This has increased from $2,000 in 2025.
Medicare is an insurance plan run by the federal government. After Medicare pays its share of costs, a person is typically responsible for part of their medical bill and for medical expenses Medicare does not cover.
Exact costs will vary depending on a person’s plan and the services they receive. Some plans have an out-of-pocket maximum. This caps the out-of-pocket costs to help protect people from an excessive financial burden.
For example, Original Medicare (parts A and B) has no out-of-pocket maximum. However, Medicare Advantage plans have a MOOP that all plan providers must adhere to, and Medicare Part D prescription drug plans limit a person’s out-of-pocket costs for take-home prescription drugs.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance 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.
There are different parts to Medicare:
- Original Medicare: This plan comprises Part A, which covers inpatient hospital costs, and Part B, which provides coverage for outpatient items and services, such as doctor’s office visits, durable medical equipment, some at-home healthcare, and limited prescription medication.
- Medicare Advantage (Part C): Private medical insurance companies administer Medicare Advantage plans. They often bundle parts A, B, and D together.
- Part D prescription drug plans: Private insurers also administer these plans, which cover take-home prescription medications. Many Medicare Advantage plans include Part D coverage.
Insurance plans usually have out-of-pocket costs. These can include:
- Deductibles: The costs a person must pay before the insurance plan begins paying its share of medical expenses.
- Coinsurance: This is often a percentage amount that a person pays after they have paid the plan’s deductible.
- Copayments: This is a fixed amount that a person pays for covered health services after the deductible is met.
- Excess charges: A charge of up to 15% more than the Medicare allowable cost, permitted by some states, which a person must pay.
The Medicare out-of-pocket maximum is the most money a person will pay for a covered service in one year. Some people may also refer to these costs as maximum out-of-pocket (MOOP).
In 2025, the MOOP for Medicare Advantage (Part C) plans is $9,350. However, some plans may choose to set lower limits. At the time of publishing, the 2026 Medicare Advantage MOOP has not yet been announced.
MOOP limits do not apply to Original Medicare.
Part D maximums
Medicare Part D covers take-home prescription drugs and has an annual deductible. The amount may vary by plan, but it cannot exceed $615 in 2026.
Additionally, a person will pay no more than $2,100 in 2026 toward the cost of their medications. Once they reach this cap, they will not pay anything for their prescription medications for the rest of the calendar year.
Prescription Payment Plans
Starting in 2025, people with Part D plans can spread their eligible drug costs over the calendar year instead of paying the full amount upfront.
This option is called the Medicare Prescription Payment Plan and is available to everyone with a Part D plan.
Medicare supplement insurance (Medigap) plans help cover some of the out-of-pocket costs associated with Original Medicare.
It is important to note that a person cannot have a Medicare Advantage plan and a Medigap plan at the same time.
People can use Medicare’s Medigap plan finder or the Medicare Advantage plan finder to find options in their ZIP code.
Medicare Savings Programs (MSPs)
Medicare Savings Programs (MSPs) can help with some out-of-pocket expenses, such as:
- Part A premiums
- deductibles
- coinsurances
- copayments
- Part B premiums
Extra Help
A person may qualify for Extra Help, which is specifically for people with Part D prescription drug plans.
In 2026, people eligible for Extra Help can expect to pay up to $5.10 for each generic drug and $12.65 for brand-name medication.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Out-of-pocket costs are those that Medicare does not cover, such as deductibles, coinsurance, copayments, and excess charges.
There is no limit on the out-of-pocket costs for Original Medicare.
Medicare Advantage and Part D prescription drug plans have maximum out-of-pocket limits set by the federal government. Plans cannot exceed these maximums, but the insurers administering the plans may choose to have much lower amounts.