Medicare Advantage Out-of-Pocket Limits: Variation and Trends
For coverage of Medicare benefits, people face a choice between traditional Medicare and private Medicare Advantage plans. While there are many distinguishing features between these coverage types, one key benefit of Medicare Advantage is an annual cap on out-of-pocket costs for medical benefits, which traditional Medicare does not include. In 2026, the out-of-pocket limit for Medicare Advantage plans may not exceed $9,250 for in-network services and $13,900 for a combination of in-network and out-of-network services, but plans can have lower out-of-pocket limits than the maximum.
Policymakers have long considered whether to add a similar out-of-pocket cap in traditional Medicare. In 1988, Congress enacted a Medicare out-of-pocket cap, but the law was repealed one year later principally due to concerns about the financing mechanism. The Medicare Payment Advisory Commission has recommended changes in traditional Medicare to give beneficiaries better protection against high out-of-pocket spending, including an out-of-pocket cap as part of a broader redesign that also includes combining Part A and Part B deductibles and simplifying cost sharing. Traditional Medicare remains the only major form of health insurance that does not include a cap on out-of-pocket spending, though most beneficiaries in traditional Medicare have additional financial protection through supplemental coverage, including Medicaid, employer- or union-sponsored retiree coverage, or a Medigap policy.
Takeaways
In 2026, the average enrollment-weighted out-of-pocket limit for Medicare Advantage enrollees is $5,421 for in-network services and $9,825 for in-network and out-of-network services combined. The average out-of-pocket limit for in-network services is higher for preferred provider organizations (PPOs) ($6,592) than health maintenance organizations (HMOs) ($4,636).
Just over one in ten Medicare Advantage enrollees (13% or 2.8 million people) are in plans with limits of $3,000 or less for in-network services in 2026, more than two-thirds (68%) are in plans with limits above $3,000 and up to $7,000, and about one in five (19%) are in plans with limits above $7,000.
About one in 10 (9%; 1.8 million) Medicare Advantage enrollees are in plans with the maximum out-of-pocket limit for in-network services ($9,250). Among the 8.6 million enrollees in PPOs, roughly one in five (22%; 1.8 million) are in plans with the maximum out-of-pocket limit for in-and out-of-network services combined ($13,900).
The average out-of-pocket limit for in-network services decreased by nearly $600 from 2017 to 2023 ($5,253 to $4,685), before increasing by about $700 from 2023 to 2026 ($4,685 to $5,421).