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


Original Medicare, which includes Part A and Part B, doesn’t limit what you pay in cost sharing, but Medicare Advantage plans that you purchase from private insurers do. Depending on your health, out-of-pocket expenses can add up quickly. The good news is you have options for assistance in paying your share of the bills.

Many people with original Medicare buy a Medicare supplement policy, also known as Medigap, to cover most of these expenses. Others help fill in the gaps with their retiree health insuranceTricare for Life military retirement insurance or other coverage.

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What out-of-pocket costs do I have with Medicare?

Even though Medicare covers many of your medical expenses after you turn 65, you still need to pay some costs yourself.

Medicare Part A pays for a portion of inpatient stays in hospitals and skilled nursing facilities. You can expect to pay:

  • A portion of hospital costs if you stay more than 60 days: $408 a day for days 61 to 90, and an $816 daily copay after day 90 for up to 60 lifetime reserve days in 2024. You’re responsible for all costs if you use up your lifetime reserve days.
  • A $204 daily copay if you stay in a skilled nursing facility for 21 to 100 days. You’re responsible for all costs beyond day 100. 

Medicare Part B covers physician services, outpatient care and durable medical equipment but also has out-of-pocket expenses. You can expect to pay:

  • A $240 deductible in 2024.
  • A 20 percent coinsurance to cover most Part B services.

However, many preventive services have no cost sharing.

Does Medicare Advantage have out-of-pocket limits?

Yes. Federal law requires Medicare Advantage plans to have an out-of-pocket limit of $8,850 or less for covered in-network services in 2024, and $13,300 or less for covered in-network and out-of-network services combined. Some plans have lower limits.

Medicare Advantage plans must provide at least the same coverage as Medicare Part A and Part B, but they can have different cost-sharing amounts. Out-of-pocket limits apply to deductibles, copayments and coinsurance you pay for expenses covered by Part A and Part B but not for additional coverage, such as dental, hearing or vision benefits. The out-of-pocket maximum also doesn’t include your premiums.

Use the Medicare Plan Finder to find limits for plans in your area. After you pay the out-of-pocket maximum in deductibles, copays and coinsurance, your plan pays 100 percent for covered services. 

Do Part D plans have an out-of-pocket spending limit?

Yes. Part D prescription drug plans have an out-of-pocket spending limit starting in 2024, and the spending cap will be even lower in 2025.

Drug plans have a variety of out-of-pocket costs , including a deductible. In 2024, the maximum deductible is $545.

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You may have different levels of copayments or coinsurance depending on your drugs and how much you’ve spent on medications during the year.

In 2024, you reach the “catastrophic coverage” level after out-of-pocket expenses for your prescription drugs hit $8,000. That includes the amount you’ve paid for deductibles, copayments and coinsurance for your medications but not the insurer’s share of the costs. At that point, you pay no more out-of-pocket costs for your covered medications for the rest of the year, thanks to new rules from the Inflation Reduction Act that took effect starting in 2024. In the past, you had to pay up to 5 percent of the cost of medication when you reached the catastrophic level.

In 2025, Part D will cap out-of-pocket costs at $2,000, which applies whether you have drug coverage through stand-alone Part D plans and those with prescription drug coverage from Medicare Advantage plans. The out-of-pocket cap can rise with inflation. KFF estimates that at least 1.5 million enrollees could save money each year because of the out-of-pocket cap.

Also in 2025, Part D enrollees will be able to spread cost-sharing payments throughout the year so that they aren’t hit with a big drug bill in one month.

Will an uncovered drug’s cost go toward catastrophic levels?

No. If you decide to pay full price for a prescription on your own, the money you spend won’t help you reach the catastrophic coverage level. If you decide to buy a covered drug from a pharmacy outside your plan’s network, that won’t count either.

How your doctor writes a prescription could be important. For example, Part D plans can’t cover drugs prescribed for weight loss. But they can pay for Ozempic to treat type 2 diabetes, which can also aid in weight loss.

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Keep in mind

Several resources can help if you have trouble paying Medicare’s out-of-pocket costs.

Medicare Savings Programs can assist with premiums, copayments and deductibles for Part A or Part B. Different levels of assistance are based on your income and assets.

The Extra Help program can help with Part D premiums, deductibles and copayments. Eligibility is based on income.

The Inflation Reduction Act expanded eligibility for full Extra Help to higher income levels in 2024.

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