Medicare Advantage Out-of-Pocket Limit: What Counts Toward It

Every Medicare Advantage plan has a yearly out-of-pocket limit for covered Part A and Part B services. Once your deductibles, copays and coinsurance for those services reach it, the plan pays the full cost of them for the rest of the year. Premiums and drug costs do not count.

Key takeaways

• Deductibles, copays and coinsurance for covered Part A and Part B services count toward the limit.
• Plan premiums, the Part B premium, Part D drug costs and most extra benefits do not count.
• Medicare sets a yearly maximum, and each plan picks its own limit at or below it.
• PPO plans usually have two limits: one for in-network care and one for all care.
• The limit starts over every January 1.

What is the out-of-pocket limit?

The out-of-pocket limit is a yearly cap on what you pay for covered medical care in a Medicare Advantage plan. A Medicare Advantage plan (Medicare Part C) is a private plan approved by Medicare that you can choose in place of Original Medicare. Some plans call the cap the maximum out-of-pocket amount.

When your costs for covered services reach the cap, you stop paying for those services that year. The plan pays the full cost. This helps in a year with a long hospital stay or many treatments.

Original Medicare has no yearly out-of-pocket cap. Many people with Original Medicare buy a Medigap policy to help with costs. For how the two paths compare, see Original Medicare vs. Medicare Advantage.

The limit applies to one calendar year in one plan. If you switch plans during the year, costs you paid in the old plan usually do not count toward the new plan's limit.

Who sets the limit?

Medicare sets a maximum each year that no plan can go above. Each plan then sets its own limit, at or below that maximum. So two plans in the same ZIP code can have very different limits.

Your plan's limit is printed in its Summary of Benefits and its Evidence of Coverage (the full rulebook for your plan). Medicare's Plan Finder at Medicare.gov also shows the limit for each plan.

Limits can change each year. Your plan's Annual Notice of Change lists next year's limit. Our guide to reading your Medicare ANOC for 2027 shows where to find it.

A lower limit is one thing to compare, not the only one. A plan with a lower limit may charge higher copays along the way.

What counts toward the limit?

These costs count, as long as they are for services your plan covers under Part A or Part B:

• Deductibles for medical care, if your plan has one
• Copays, such as a set amount for a doctor visit or a hospital day
• Coinsurance, a share of the cost, such as for an MRI or outpatient surgery
• Emergency and urgently needed care, in or out of network

The care must follow your plan's rules. If your plan requires approval before a service, called prior authorization, get it first. Costs for care the plan denied do not count.

Here is an example. Say you have a hospital stay with a daily copay, then outpatient therapy with coinsurance. Each of those payments adds up toward your limit.

What does not count toward it?

Several costs sit outside the limit:

• Your monthly plan premium, if your plan charges one
• Your Part B premium. The 2026 standard Part B premium is $202.90 a month; it is set each year.
• Part D drug costs, even when drug coverage is part of your plan
• Most extra benefits, such as routine dental, vision and hearing care
• Services the plan does not cover, and out-of-network care an HMO does not cover

Because of these, your total spending for the year can be higher than the limit. Add your premiums and drug costs to see the full picture.

Some plans lower the Part B premium you pay, often called a Part B giveback. That reduction is separate from the limit, and it varies by plan.

How do drug costs fit in?

Drug costs have their own separate cap. In 2026, the Part D yearly out-of-pocket cap is $2,100. In 2027, it is $2,400. These caps are set each year.

Once you reach the drug cap, your plan pays the full cost of covered drugs for the rest of the year. This applies to stand-alone drug plans and to Medicare Advantage plans with drug coverage.

So a Medicare Advantage plan with drug coverage has two caps: one for medical care and one for drugs. Spending toward one does not count toward the other.

If your drug costs are high, every Medicare drug plan must offer the Medicare Prescription Payment Plan. If you choose to join it, you pay $0 at the pharmacy counter and get monthly bills instead. It spreads costs over the rest of the year but does not lower them.

How do HMO and PPO limits differ?

Your plan type changes how the limit works, mostly for care outside the network.

The key difference is out-of-network care. In an HMO, it usually is not covered and does not count. In a PPO, it counts toward a second, higher limit.

In a PPO, in-network costs count toward both limits, while out-of-network costs count only toward the combined one. See HMO, PPO, PFFS, MSA: How Each Medicare Advantage Plan Type Works.

How can you track your spending?

Your plan sends an Explanation of Benefits (a statement of the care you got and what you owe) after you use services. Many statements show how close you are to your limit. The plan's website may show it too.

Keep your bills and statements in one folder. If a bill looks wrong, compare it with your Explanation of Benefits before you pay.

Plan details vary by location and carrier. When you compare plans in Plan Finder, look at each plan's limit, premium and copays side by side.

The limit starts over on January 1. If you reach it in December, your costs begin again in the new year.

Have questions? Call 1-877-443-3251 to talk it through with a licensed insurance agent. You never pay the agent; the plans they represent do, and the decision stays yours.

We do not offer every plan available in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options. Medicare has neither reviewed nor endorsed this information.