UNDERSTANDING YOUR MEDICARE OUT-OF-POCKET COSTS

Michael T. Braden March 19, 2026 MEDICARE 101

Photo Of Braden Medicare Insurances 2026 What Is The Out-Of-Pocket Maximum With Medicare Poster

In today's article, we are taking a closer look at what is included in Medicare's Out-Of-Pocket costs for both Original Medicare and for Medicare Advantage plans (Medicare Part C). Most new Medicare Beneficiaries are caught off guard when they learn that Original/Traditional Medicare has no limits on deductibles, copays, or coinsurance, which can add up without limit.

However, Medicare Advantage plans must set a MOOP for each plan. MOOP stands for Maximum-Out-Of-Pocket Expenses. Moop amounts are designed to let you know that you cannot be charged any amount over your MOOP for your particular Medicare Advantage plan. Once you reach that amount, your plan will pay for all of your expenses for the remainder of the Plan Year/Calendar Year.

Medicare Supplement/Medigap plans were designed to help reduce this exposure for those who prefer to be in control of their own Healthcare and choose Original Medicare vs Medicare Advantage plans.

MEDICARE OUT-OF-POCKET EXPENSES

Traditional or Original Medicare (Parts A and B) has no annual Medicare out-of-pocket maximum, so, in theory, Medicare beneficiaries could face an unlimited amount of costs from co-pays, deductibles, and coinsurance alone.

There are two options for Medicare Beneficiaries to limit their cost exposures. The first is to place a limit on the maximum annual out-of-pocket costs for Medicare bills, which requires either adding a Medigap/Medicare Supplement plan or replacing their original Medicare with a Medicare Advantage plan.

Medicare Advantage plans (Part C) are all required by law to have out-of-pocket costs, which cap your yearly spending on covered, in-network services. Last year, in 2025, the highest allowed limit was $9,350 for in-network services and $13,300 for out-of-network services. If this seems high, there are plenty of Medicare Advantage plans with lower limits. Additionally, plans will change over time, and inflation has had a large impact over the past 2-3 years alone.

Medicare Supplement (Medigap) plans protect by offering a variety of options. Some plans, like Plan G, offer very low maximums (limited to the Part B deductible, which is just $283 for the 2026 Plan Year, while others, like Plans K and L, have higher limits due to partial coverage. All the Medicare supplement plans offer more insurance and lower out-of-pocket costs than Medicare Advantage plans.

For example, in the Southwest and Midwestern states, the average cost of Medigap Plan G is about $170 per month, or $2,040 per year. Once you add the $283 Annual Part B deductible, it caps your healthcare costs at $2,23.00 for the year, compared to the National Average of Medicare Advantage plan MOOPS, which is now over $5,000 for In-Network costs alone.

PLEASE REFER TO THIS EXAMPLE AS IT SHOWS MONTHLY MEDICARE COSTS WITH A MEDICARE SUPPLEMENT PLAN G

Photo Of Braden Medicare Insurance's 2026 Monthly Medicare Cost Estimate Worksheet Poster

MORE ABOUT MAXIMUM MEDICARE OUT-OF-POCKET COSTS

When you first enroll in Medicare, most people start with Medicare Part A (In-Patient Hospital Services) and Medicare Part B, outpatient (All Of Your Out-Patient Healthcare Costs, including Durable Medical Equipment (DME), and Out-Patient Surgery Center services).  It is possible to get Medicare Part A months or years before Part B. Still, these are the two parts of Medicare required before deciding on a Medicare Supplement/Medigap plan or Medicare Advantage plan (Medicare Part C).

Original Medicare does not have an annual maximum out-of-pocket limit.  It was never intended to be a stand-alone, full-coverage option for seniors. Therefore, there is no cap on Medicare out-of-pocket spending in Original Medicare. Simply put, this means that yourng your Medicare out-of-pocket costs can be unlimited in theory.

WHAT MAKES UP THESE OUT-OF-POCKET COSTS?

Out-of-pocket costs or out-of-pocket expenses include deductibles, copayments, and coinsurance. These medical expenses can add up quickly without a maximum limit. The only way to place a maximum out-of-pocket on your financial risk for covered health services is to either purchase a Medicare supplement Plan or a Medicare Advantage Plan.

For those who qualify, Medicare beneficiaries can access savings programs that are available through Medicare to help manage out-of-pocket costs, including premiums, deductibles, copayments, and even costs related to prescription drugs.

MEDICARE SUPPLEMENT ANNUAL OUT-OF-POCKET LIMITS

With 12 Medicare Supplement Plans to choose from, there are some with limits and some with no limits at all. Please refer to the 2026 Medicare Supplement Comparison Chart below to distinguish the intricacies of each plan.

Photo Of Braden Medicare Insurance's 2026 Medicare Supplement Side-By-Side Comparison Chart

Here are the Top 5 Most Popular Medicare Supplement/Medigap Plans since 2020:

1. Plan G

2. Plan N

3. Plan F

4. Plan C

5. High Deductible Plan G

   
   

For example, the out-of-pocket maximum for Plan G equals the Medicare Part B deductible ($283 for 2026), a “hard” fixed maximum out-of-pocket.  The out-of-pocket maximum for high-deductible Medigap plans equals their annual deductible ($2,950 in 2026), again, a hard limit.

However, your out-of-pocket maximum for Plan N is the Part B deductible plus office/ emergency room copays.  We have no way of knowing how many office visits you may have in any given year, but we can assume a reasonable number. You can be charged between $0 and $20 per doctor's visit, and $50 for a Hospital Emergency Room Visit if you are not admitted. Because it is not a set amount, we refer to these as a soft maximum out-of-pocket amount.

For 2026, the out-of-pocket maximum for Plan K is $8,000; for Plan L, it is $4,000.   The out-of-pocket maximum only refers to medical services approved or accepted by Medicare and does not include any services or procedures not covered by these supplement plans.

You might notice that, when you look closely at the table, most Medicare supplement Plans show 100% coverage for the major benefits.

MEDICARE PART B COVERAGE

For example, Medicare Part B coinsurance or copayment.  That is the 20% that Medicare Part B does not cover. You have 100% coverage.  Everything is covered until you reach Plans K and L. Medigap Plan K has only 50% coverage.  Medigap Plan L has only 75% coverage.  These coinsurance and copayment amounts apply to a wide range of medical expenses and medical services, including doctor visits, outpatient care, durable medical equipment, and covered drugs.

IN-PATIENT HOSPITAL PART A COVERAGE

Look at Part A hospital coinsurance.  With no supplement, you have 60 days of coverage before you start paying a daily copay.  That copay is covered 100% by a Medicare supplement plan, except for Plans K & L.  Plan K only covers 50%.  Plan L covers 75%.  Hospital costs, such as room and board, medications administered during your stay, and other inpatient services, are included in these expenses.

SKILLED NURSING FACILITIES (SNF)

Medicare Part A covers the first 20 days at 100%, with the consumer paying a daily copay for days 21 through 100, for a total of no more than $17,360. That’s the maximum for 2026.  Skilled nursing facility costs, including daily care and rehabilitation services, are subject to these copays depending on your coverage.

If you have Medicare supplement Plan A or Plan B, you will pay whatever Medicare doesn’t pay, including skilled nursing facility costs. Which means if you spend 100-days in a skilled nursing facility you will pay up the maximum of $17,360.   If you have any supplements other than supplement plans K and L, you have 100% coverage.  100 days of skilled nursing care cost you nothing out-of-pocket. Zero. ($0).

PARTIAL COVERAGE PLANS

So, the reason Medicare supplement Plans K & L have a maximum out-of-pocket cost is that they offer only partial coverage for major services.  The consumer has significant financial exposure to medical bills because they do not have 100% coverage for these major services, which is where catastrophic coverage could help mitigate that risk.  Without a set maximum out-of-pocket limit for those two plans, the consumer would have unlimited financial exposure, which could result in an excessive financial burden.

Think of the annual maximum out-of-pocket costs as only referencing the benefits that are covered at either 50% or 75% by these two plans.

Another way to describe this is simply with a question.  How can a consumer have any financial risk if the Medicare supplement is paying 100% of the Medicare bill?

So Many Professionals Got This Wrong!

THE TWO THINGS MANY PEOPLE GET WRONG WHEN IT COMES TO MEDICARE

MEDICARE DOES NOT COVER LONG-TERM CARE

First, Medicare is not Long-term Care.   Long-term care needs are not even considered on this benefit table.

For example, your Skilled Nursing Care benefits end after 100 days. At 101 days of Skilled Nursing, you have no Medicare benefits and no Medicare supplement benefits. It doesn’t matter whether these supplement plans have zero coverage for Skilled nursing, like Plans A and B, 100% coverage, like Plans C, G, and N, or just 50% or 75% coverage, like Plans K and L. At day 101, your Medicare coverage is depleted. In addition, after you use your initial 90 days of inpatient hospital care, Medicare provides up to 60 additional ‘lifetime reserve days’ that can be used over your lifetime for extra hospital coverage. Once these are used, you must pay all costs out of pocket.

Medicare coverage is structured around ‘benefit periods’: a benefit period begins the day you are admitted as an inpatient to a hospital or skilled nursing facility and ends after you have been out for 60 consecutive days. Each benefit period resets the deductible and coinsurance requirements, and multiple benefit periods can occur within a year, which may increase your out-of-pocket costs for inpatient care.

A new benefit period begins after you have been out of the hospital or skilled nursing facility for 60 days, and each new benefit period resets certain costs and coverage terms. You are on your own unless you have Long-Term Care Insurance. That is where your Long-Term Care insurance policy will begin.

WHAT IS COVERED?

Second, and this is key, the maximum out-of-pocket cost limit only applies to what the Medicare supplement covers. Only costs for covered services are counted toward the out-of-pocket maximum, meaning that expenses for any covered service under the supplement plan, including those services that Medicare covers, are included, while non-covered services are not.

For example, the maximum out-of-pocket cost shown for Plan K is $8,000 for 2026.  But that $8,000 is only applicable to what the supplement plan covers, excluding the annual deductible.  It does not cover the Part B deductible. That’s an additional expense not included in the maximum out-of-pocket.  It doesn’t cover Excess Charges.  If you have Excess Charges, they are in addition to the maximum out-of-pocket.

Now let’s apply that information to Medicare Supplement Plans A and B.  For Medicare services that Plan A or Plan B covers, they pay 100% of the Medicare bills that Original Medicare does not pay.  The maximum out-of-pocket cost only references the portion of Medicare services covered by the supplement.  There is no maximum annual out-of-pocket cost listed because the benefits they cover are covered at 100%.   There is simply no supplemental insurance for Skilled Nursing. That means you have a maximum out-of-pocket of $0.00 for the benefits it covers.  It just doesn’t cover as much as the other plans. There are inconvenient holes in the coverage.

WHAT IS THE MAXIMUM-OUT-OF-POCKET FOR PLAN G?

The maximum out-of-pocket for Plan G is the Medicare Part B deductible ($283 for 2026). Medicare Supplement Plan G covers all inpatient and outpatient Medicare expenses not paid for by Medicare. Coverage is based on the Medicare-approved amount for each service, meaning Plan G pays costs that are Medicare-approved after you meet your deductible. Medicare covers hospital stays, doctor visits, and other health services, while Plan G fills in the gaps for expenses not fully covered by Medicare. Your only expense is the annual Part B deductible. There is also no annual or lifetime cap on the benefits you receive.

DOES PLAN G HAVE A DEDUCTIBLE?

No, regular Plan G does not have a deductible.  However, you must pay the annual Medicare Part B deductible, which is $283 for 2026, unless you have a plan through preferred provider organizations that may include coverage for prescription drugs.  In addition, the b monthly premium is a separate, recurring cost for outpatient coverage and is not included in the out-of-pocket maximum.  The high-deductible version of Plan G has a $2,950 deductible for 2026.  That is also its maximum out-of-pocket.

Well, we have to exclude Foreign Travel because Medicare itself does not cover emergency healthcare for foreign travel, as stipulated in the Inflation Reduction Act.   That is simply an extra benefit provided by the supplement.

Medicare Supplement Plan G covers 100% of every Medicare service. The only Medicare service it does not cover, whether inpatient or outpatient, is the annual Medicare Part B deductible.  That is $283 for 2026.    That’s it.  If you have a Medicare supplement Plan G, your maximum out-of-pocket financial risk for 2026 is $283, which does not include any prescription drug coverage.

If you were to list a maximum out-of-pocket, the way this table is designed, it would be zero.  But considering real life, your maximum out-of-pocket will be the Medicare Part B deductible**.**  This is a heck of a lot less than the financial exposure you have with Medicare supplement Plans K and L.  In fact, it is the lowest maximum out-of-pocket financial risk available to a consumer under Medicare.

Considering real-life costs rather than the limits of this table, let us look at the maximum out-of-pocket costs for the other popular Medicare supplements, including potential drug costs.

WHAT IS THE MAXIMUM-OUT-OF-POCKET FOR PLAN N?

When a Medicare supplement does not cover the Part B Excess Charges, like Medigap Plan N and Medigap Plan D, for example, we presume the consumer will avoid excess charges. It’s very easy to do. However, beneficiaries should be aware that they will still need to pay out of pocket for costs such as copays and deductibles. Please see my video on Best Medicare Supplement Plans for a detailed explanation of how easy it is.

DOES PLAN N HAVE A DEDUCTIBLE?

No, Plan N does not have a deductible.  However, you will have to pay the annual Medicare Part B deductible, which is $283 for 2026. The monthly premium is a separate, recurring cost that is not included in your out-of-pocket maximum.

DOES PLAN N HAVE ANY CO-PAYS?

Yes.  There is a $20 copay for office visits that involve diagnosis or evaluation.  There is a $50 copay for emergency room visits that do not result in a hospital admission.  These copays are part of the plan’s cost-sharing structure, which determines how much you pay out-of-pocket for covered services. Urgent Care and Telehealth visits can be billed as an office visit.    There is no copay for physical therapy or chemotherapy office visits.

WILL PLAN N COVER MEDICARE PART B EXCESS CHARGES?

No.  Only Plan G and Plan F will pay Part B excess charges.  However, excess charges are easy to avoid using Medicare’s online physician lookup tool.

When you receive medical services, Medicare pays its approved portion of the costs first, and you are responsible for the remaining expenses, such as the Part B deductible and any applicable copays. With the presumption that excess charges will be avoided, the Medicare Supplement Plan N maximum out-of-pocket will be the amount of the Medicare Part B deductible plus any of the copays you pay for office visits.  The maximum is $20 for an office visit and $50 for a hospital emergency room visit. For a detailed comparison of these costs and coverage options, see Medicare Supplement Plan N vs Plan G.

You may not know the exact number of office visits you will have in a year, but for all practical purposes, that cost, including Part D cost-sharing, will likely be less than the Part B deductible.

In case you were not aware, not all office visits qualify for the $20 copay.  For details, please see my video on Best Medicare Supplement Plans, linked above and below my left shoulder.

The maximum out-of-pocket limit for a Medicare supplement Plan N is among the lowest available in Medicare.    For all practical purposes, it will be a number less than twice the Medicare Part B deductible and certainly much, much lower than Medicare supplement Plans K and L.

MEDICARE SUPPLEMENT HIGH-DEDUCTIBLE PLAN G AND PLAN F

What about the high-deductible Medicare supplements?  That’s easy.  The maximum out-of-pocket is equal to the deductible.  That deductible is $2,950 for the year 2026.  It increases each year with increases in the Consumer Price Index -U, rounded to the nearest $10 increment

WRAPPING THINGS UP

I hope you found this article easy to read and understand, and, more importantly, that it answered any questions you may have had regarding Medicare Out-Of-Pocket Costs, Deductibles, Co-Insurance, and Co-Pays. If you still have questions or would like any more information about Medicare, Medicare Supplement/Medigap Plans, or Medicare Advantage and Medicare Part D Prescription Drug Plans, please feel free to reach out to me anytime. You can call me at (480) 225-1393 or email me directly at mike@bradenmedicare.com.