Explainer
Original Medicare has no limit on what you can spend in a year. That’s the whole decision.
Medicare.gov states it in one line near the top of its costs page, and it is the single most consequential sentence in the program. Everything people argue about in the fall comes back to it.
By Kwame Kuadey
Adjunct Professor of Finance, Johns Hopkins Carey Business School · Published July 7, 2026 · 5 min read
Most explanations of Medicare start with the alphabet — Part A, Part B, Part C, Part D — and by the time anyone reaches the part that matters, they’ve stopped reading. So let’s start with the part that matters.
From Medicare.gov’s own costs page: “There’s no yearly limit on what you pay out-of-pocket, unless you have supplemental coverage, like a Medicare Supplement Insurance (Medigap) policy, or you join a Medicare Advantage Plan.”
If you’ve spent your working life with employer insurance, that sentence should stop you. Employer plans have an out-of-pocket maximum. It’s the number that makes a catastrophic year survivable — you can lose your health, but there’s a floor under how much you can lose financially. Original Medicare, by itself, has no such number.
What you’re exposed to, in 2026 dollars
Once you understand there’s no ceiling, the individual numbers stop looking like trivia:
Original Medicare, 2026
Two of those lines carry more weight than the rest.
“Per benefit period,” not per year. The hospital deductible isn’t annual. A benefit period starts when you’re admitted and ends after you’ve been out for 60 days — and Medicare.gov is explicit that there’s no limit to how many benefit periods you can have in a year. Three separate hospitalizations spread across a year can mean paying that deductible three times. Most people assume, reasonably and wrongly, that they pay it once.
Twenty percent of what? Part B coinsurance is usually 20 percent of the Medicare-approved amount. On a routine visit that’s small. On a course of treatment that runs into six figures, 20 percent is not small, and nothing in Original Medicare stops it from continuing.
Which is why the fall decision is really one question
Medigap and Medicare Advantage are usually presented as a comparison of networks, extras, and monthly premiums. Underneath all of that, they are two different answers to the same question: how do I put a ceiling on a program that doesn’t have one?
A Medigap policy covers your share of the Part A and Part B costs, in exchange for a monthly premium on top of Part B. A Medicare Advantage plan replaces how you receive those benefits and carries its own out-of-pocket maximum, in exchange for using its network and its rules.
They are genuinely different trades and reasonable people choose differently. What isn’t a real option — though it’s the default for anyone who does nothing — is having no ceiling at all.
The timing detail nobody mentions until it’s too late. Medigap and Medicare Advantage are not symmetrical over time. Moving toward Medicare Advantage is straightforward during any open enrollment window. Moving back to Original Medicare and buying a Medigap policy later can require medical underwriting depending on your state and circumstances — meaning an insurer may look at your health first. Ask about your state’s rules before your first enrollment, not during the year you need the coverage.
Also worth knowing
- Part D has no fixed deductible or copay in the rules — those vary by plan and pharmacy, which is why comparing plans on premium alone is close to meaningless.
- The Part B late enrollment penalty is permanent. Not a one-time fee; a surcharge you pay for as long as you have Part B, and it grows the longer you wait.
- Part D has its own penalty, triggered by going 63 days or more without creditable drug coverage. People who take no medications at 65 are the ones who trip this, and they trip it years before they find out.
- Extra Help exists. If your income and resources are limited, it can cover Part D premiums and costs — and it also waives that late enrollment penalty.
None of this is an argument for a particular plan, and we don’t sell one. It’s an argument for understanding what the default actually is, because the default is the only option with no number at the bottom of it.
Claim → source
| Claim in this story | Source |
|---|---|
| There is no yearly limit on out-of-pocket costs in Original Medicare unless you have supplemental coverage such as Medigap or a Medicare Advantage plan | Medicare.gov, Medicare costs |
| 2026: Part A premium $0 for most people; Part A deductible $1,736 per benefit period | Medicare.gov, Medicare costs |
| 2026: hospital days 61–90 cost $434/day; days 91–150 cost $868/day using lifetime reserve days | Medicare.gov, Medicare costs |
| 2026: skilled nursing facility days 21–100 cost $217/day | Medicare.gov, Medicare costs |
| 2026: Part B premium $202.90/month; Part B deductible $283; coinsurance usually 20% | Medicare.gov, Medicare costs |
| There is no limit to the number of benefit periods in a year, so the Part A deductible may be paid more than once | Medicare.gov, Medicare costs |
| Part D deductibles, copayments, and coinsurance vary by plan and pharmacy | Medicare.gov, Medicare costs |
| The Part B late enrollment penalty is paid for as long as you have Part B and grows the longer you wait | Medicare.gov, Medicare costs |
| The Part D penalty is triggered by going 63 days or more without creditable drug coverage | Medicare.gov, Medicare costs |
| Extra Help can pay Part D premiums and costs, and removes the Part D late enrollment penalty | Medicare.gov, Medicare costs |
Sources
- Medicare.gov — Medicare costs ↗
- Medicare.gov — Joining a plan ↗
Verified August 16, 2026. Every figure here changes annually. CMS normally announces the following year’s amounts in November — re-verify then. Corrections: hello@benefitsinsider.co.
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