Your Medicare Advantage out-of-pocket maximum (often called the MOOP) caps the total cost-sharing you pay for covered Part A and Part B services during a calendar year. Copays, coinsurance, and deductibles for hospital stays, doctor visits, lab work, outpatient surgery, and other medical services covered under Medicare Parts A and B all count toward that limit. Once your spending hits it, the plan pays 100 percent of covered services for the rest of the year. But several categories of spending that feel like medical costs, including monthly premiums, Part D prescription drug expenses, and charges for many supplemental benefits, do not count at all, which catches many enrollees off guard.
Costs That Count Toward the Cap
The simplest rule of thumb: if the charge is cost-sharing for a service that Original Medicare would cover under Part A or Part B, it almost certainly counts toward your MOOP. That includes your share of inpatient hospital care, skilled nursing facility stays, home health services, outpatient procedures, physician office visits, durable medical equipment, diagnostic imaging, and emergency room visits. Whether the cost-sharing takes the form of a copay (a flat dollar amount per service), coinsurance (a percentage of the allowed charge), or an annual deductible, it accrues toward the same annual limit.
Mental health services, physical therapy, occupational therapy, speech-language pathology, and preventive screenings covered under Part B also count. So does ambulance transport when your plan covers it. If you receive emergency or urgently needed care while traveling and the plan covers the claim, those out-of-pocket charges count too, even if the provider is outside your plan’s network.
Costs That Do Not Count
This is where the confusion tends to pile up. Several categories of spending are excluded from the MOOP calculation entirely:
- Monthly premiums: The premium you pay for the Medicare Advantage plan itself (and your Part B premium, if it’s deducted separately) never counts toward the out-of-pocket max.
- Part D drug costs: Prescription medications covered under Part D have their own separate cost-sharing structure with its own catastrophic threshold. None of that spending applies to the medical MOOP.
- Supplemental benefit charges: Many Medicare Advantage plans advertise dental, vision, hearing, and fitness benefits. Cost-sharing for these supplemental services typically does not count toward the MOOP, because these benefits are outside the scope of Original Medicare’s Part A and Part B coverage.
- Out-of-network care in HMO plans: If you have an HMO-type Medicare Advantage plan and receive non-emergency care from an out-of-network provider, the plan usually will not cover it at all. Since the plan did not pay, the charges do not count toward your MOOP. You are simply responsible for the full bill.
- Services the plan does not cover: If a service is denied as not medically necessary, or if you receive a service that is excluded from your plan’s benefit package, those costs sit outside the MOOP.
The Part D exclusion is the one that trips people up most often. Someone with cancer or a serious autoimmune condition can spend thousands on specialty medications and still not move their MOOP needle a single dollar, because drug spending and medical spending are tracked on separate ledgers.
In-Network Versus Combined Limits
Medicare Advantage plans that allow out-of-network care, primarily PPOs, must set two separate out-of-pocket limits. The in-network MOOP covers cost-sharing only for services received from providers inside the plan’s network. The combined MOOP (sometimes called the total MOOP) includes both in-network and out-of-network cost-sharing. The combined limit is always higher than the in-network limit, sometimes considerably so.
If you stay entirely within the network, the in-network limit is the one that matters. But if you regularly see out-of-network specialists, your out-of-pocket spending can climb toward the higher combined ceiling before the plan takes over full payment. HMO plans generally do not cover out-of-network care (except in emergencies), so they typically have only an in-network MOOP.
Data on non-SNP Medicare Advantage plans from 2022 to 2023 illustrate the gap between these two limits. The average in-network MOOP weighted by enrollment was roughly $5,400 to $5,500, while the average combined MOOP ran close to $9,500 to $9,600 over the same period.
How Plans Set Their Limits Below the Federal Maximum
CMS, the federal agency that oversees Medicare, establishes a ceiling on the MOOP each year. Plans are free to set their actual out-of-pocket limits at or below that ceiling, but never above it. In practice, many plans choose a MOOP well below the federal maximum, especially plans competing for healthier enrollees who are cost-conscious. A study of Medicare Advantage enrollment patterns found that beneficiaries who actively compared plans each year were more likely to end up in plans with a MOOP below $4,000 than those who did not shop around, by roughly five percentage points.1JAMA Network Open. Association of Health Insurance Literacy With Enrollment in Traditional Medicare, Medicare Advantage, and Plan Characteristics Within Medicare Advantage
The federal ceiling changes annually and has drifted upward over time. Plans serving different markets set their MOOPs at various levels depending on the plan type, the insurer’s strategy, and the local competitive landscape. A plan with a lower premium might set a higher MOOP, while a plan that charges a monthly premium might set a lower MOOP. That tradeoff between premium and cost-sharing exposure is worth paying attention to during open enrollment, particularly if you anticipate a year with significant medical needs.
Why PPO and HMO Plans Behave Differently
Plan type shapes not just whether you have one MOOP or two, but also how quickly you approach the limit. HMO plans generally require referrals for specialists and restrict coverage to network providers, which keeps per-service costs lower but limits flexibility. PPO plans allow out-of-network access at higher cost-sharing rates, meaning the dollars accumulate faster when you go outside the network. Research on employer-sponsored Medicare Advantage plans found that PPOs were the most common plan type, accounting for over 44 percent of enrollees in one large dataset, followed by comprehensive and HMO plans.2National Institutes of Health (PMC). Employer-Sponsored Medicare Advantage Plans and the 2018 Therapy Cap Repeal: Reduced Overall Spending does not Constrain Out-of-Pocket Costs
Exclusive provider organization (EPO) plans are less common but work similarly to HMOs in that they generally restrict coverage to in-network providers. Point-of-service (POS) plans blend features of HMOs and PPOs. Regardless of the plan structure, the fundamental MOOP rules are the same: Part A and Part B cost-sharing counts, Part D and premiums do not. The practical difference is how much cost-sharing you accumulate and how fast, because copays and coinsurance rates vary dramatically by plan type and by whether you stay in-network.
The Part D Prescription Drug Cap Is Separate
Starting in 2025, a new $2,000 annual cap on out-of-pocket spending for Part D prescription drugs went into effect, a significant change from the previous structure where catastrophic coverage still left enrollees paying a percentage of drug costs. This cap is entirely separate from the medical MOOP. Think of it as two distinct buckets: one for your medical services (the MOOP) and one for your prescriptions (the Part D cap). Spending in one bucket does not transfer to the other.
For someone managing both expensive medications and frequent medical visits, this means tracking two running totals. You could hit the Part D cap in March from a costly specialty drug and still be well short of your medical MOOP. Or the reverse: a major surgery might blow through your medical MOOP early in the year while your drug costs remain modest. Each cap protects you independently once you reach it, but neither one helps with the other.
What Happens When You Hit the Maximum
Once your qualifying cost-sharing reaches the MOOP, your plan pays 100 percent of all covered Part A and Part B services for the rest of that calendar year. You still owe your monthly premium and any Part D cost-sharing, but office visits, hospital stays, lab work, and other covered medical services cost you nothing out of pocket until the calendar resets on January 1.
The reset is important. The MOOP is an annual limit, not a lifetime cap. Every January, the counter goes back to zero and you start accumulating again. If your plan’s MOOP changed for the new year (because you switched plans or your current plan adjusted its benefits), the new limit applies from day one. People with chronic conditions or recurring high-cost treatments sometimes hit their MOOP early in the year and enjoy many months of zero cost-sharing, which is one reason why a lower MOOP can be worth a higher monthly premium if you know your annual medical spending tends to be substantial.
Dual-Eligible Beneficiaries Face Different Rules
If you qualify for both Medicare and Medicaid, you may be enrolled in a Dual Eligible Special Needs Plan (D-SNP), a type of Medicare Advantage plan designed specifically for this population. The MOOP dynamics in D-SNPs have shifted notably in recent years. Between 2022 and 2023, the average in-network MOOP in D-SNPs rose by about 32 percent, climbing from around $5,500 to roughly $7,250, while non-SNP plans held essentially flat over the same period.3JAMA Health Forum. Maximum Out-of-Pocket Limits in Dual-Eligible Special Needs Plans
That jump matters in principle, but the practical impact on dual-eligible beneficiaries is nuanced. Medicaid typically picks up cost-sharing that Medicare does not cover, so many dual-eligible enrollees never actually pay anywhere close to the MOOP out of their own pockets. The concern among researchers is that a higher nominal MOOP creates a wider gap between what the plan promises to cap and what Medicaid programs must absorb, shifting costs between government programs rather than reducing them for individuals. Combined (in-network plus out-of-network) MOOPs in D-SNPs increased by a similar margin over the same period, rising from about $8,800 to nearly $11,700.3JAMA Health Forum. Maximum Out-of-Pocket Limits in Dual-Eligible Special Needs Plans
How Medicare Advantage Compares with Original Medicare
Original Medicare (Parts A and B without a Medicare Advantage plan) has no out-of-pocket maximum at all. That is one of its biggest structural vulnerabilities: a catastrophic hospitalization or a series of expensive treatments can result in unlimited cost-sharing. Many people on Original Medicare buy a Medigap supplemental policy to fill that gap, but Medigap premiums add to the overall cost.
A comparison of projected out-of-pocket costs from 2014 through 2019 found that typical enrollees in Medicare Advantage faced out-of-pocket costs (including both cost-sharing and premiums) that were roughly 18 to 24 percent lower than those in traditional fee-for-service Medicare.4Health Affairs. Expected Out-Of-Pocket Costs: Comparing Medicare Advantage With Fee-For-Service Medicare The MOOP itself is a major reason for that difference: once you hit the ceiling, your costs stop climbing, something that Original Medicare alone cannot guarantee. Of course, that protection comes with trade-offs like network restrictions and prior authorization requirements that Original Medicare does not impose.
Tracking Your Spending Through the Year
Most Medicare Advantage plans provide an Explanation of Benefits (EOB) after each claim is processed, and many offer online portals or apps where you can see a running total of your out-of-pocket spending relative to your MOOP. Taking advantage of those tools is worth the effort, because billing errors and miscategorized claims do happen. If a charge that should count toward your MOOP is not being tracked, you may end up paying more than you should.
Enrollees who actively reviewed and compared their plan options each year tended to end up in more favorable plans overall, selecting plans with higher quality ratings and lower premiums in addition to lower MOOPs.1JAMA Network Open. Association of Health Insurance Literacy With Enrollment in Traditional Medicare, Medicare Advantage, and Plan Characteristics Within Medicare Advantage That finding underscores a broader point: understanding your out-of-pocket maximum is not just about tracking costs during the year. It is also about choosing the right plan in the first place. During the Annual Enrollment Period each fall, your MOOP should be one of the first numbers you compare across plans, right alongside premiums and the provider network.
If you believe your plan has incorrectly excluded a charge from your MOOP calculation, you have the right to appeal. Medicare Advantage plans are required to follow a formal grievance and appeals process. Start by calling the number on the back of your plan card and requesting a review of the specific claim. Keep copies of your EOBs and any supporting documentation, because the appeals process can involve multiple levels of review and you may need to show that the service in question was covered under Part A or Part B and should therefore count toward your annual limit.
Common Scenarios That Confuse People
A few real-world situations generate an outsized share of the confusion around what counts:
- Observation stays versus inpatient admission: If you are held at a hospital under observation status rather than formally admitted as an inpatient, the stay is classified as outpatient care under Part B. Your cost-sharing is calculated differently (often higher), but it still counts toward your MOOP. However, observation status can affect whether a subsequent skilled nursing facility stay is covered at all, which creates a separate financial exposure that the MOOP does not protect against.
- Out-of-area emergencies: Emergency and urgently needed care received anywhere in the United States is covered by your Medicare Advantage plan regardless of network. The cost-sharing you pay for that care counts toward your MOOP.
- Dental work through a supplemental benefit: If your plan includes dental coverage as a supplemental benefit, the copays you pay at the dentist usually do not count toward your MOOP. The same generally applies to routine vision exams and hearing aid benefits.
- Balance billing: Medicare Advantage plans contract with providers who agree to accept the plan’s payment rates. In-network providers cannot balance-bill you beyond the plan’s cost-sharing. Out-of-network providers in a PPO plan are still limited by Medicare’s rules, but the cost-sharing is higher and counts toward the combined MOOP, not the in-network one.
The observation-stay issue is a persistent sore spot because patients often do not realize they were never formally admitted until the bill arrives. If you or a family member is in the hospital, asking whether the stay is classified as inpatient or observation can save significant confusion later when you try to reconcile what counted toward your annual limit.
When Switching Plans Resets Your Progress
If you switch Medicare Advantage plans mid-year during a Special Enrollment Period (for example, because you moved to a new service area or lost employer coverage), your out-of-pocket accumulation does not carry over to the new plan. You start at zero with the new plan’s MOOP. This can be financially painful if you had already spent thousands toward your old plan’s limit. The same applies if you switch from Medicare Advantage to Original Medicare mid-year: since Original Medicare has no MOOP, the concept simply disappears, and you are exposed to unlimited cost-sharing unless you pick up a Medigap policy.
The reverse situation, switching from Original Medicare into a Medicare Advantage plan mid-year, also starts you at zero on the new plan’s MOOP. Any cost-sharing you paid under Original Medicare does not transfer. For this reason, most people find it least disruptive to make plan changes during the Annual Enrollment Period, effective January 1, when everyone’s counter resets regardless.