Original Medicare has no limits on out-of-pocket costs. However, Medicare Advantage plans have out-of-pocket maximums and Medigap plans can limit out-of-pocket costs as well.

An out-of-pocket maximum is the maximum amount you can spend in a year on in-network copays and coinsurance for covered or eligible medical and hospital services covered by Original Medicare (Part A and Part B).

So if a Medicare Advantage plan has for example a $6,700 maximum out-of-pocket (MOOP), that means the most you can spend out-of-pocket on copays and coinsurance for services covered under Original Medicare is $6,700.

It works like this on Medigap policies with maximums as well.

TIP: Every year the highest a maximum out-of-pocket (MOOP) can be is set. Plans can offer lower maximums, but not higher maximums, in that year.

TIP: Only out-of-pocket costs like copayments and coinsurances count toward your maximum, premiums and drug costs do not for example. Drugs have their own limits like initial coverage limit and catastrophic coverage limit.