Essential Medicare Advantage Guide: Protect Your Security

Medicare Advantage plans have annual out-of-pocket limits, which set them apart from Original Medicare. But some restrictions apply, and the total cost for medical procedures can vary.

That’s why it’s important to understand the rules that govern how and where you can receive care, as well as the dollar amounts for each plan.

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What the Medicare Advantage out-of-pocket limit covers

Medicare Advantage plans cap a consumer’s annual spending on Medicare-covered Part A and Part B services, while there is no annual cap for Original Medicare. If medical bills seem to climb endlessly, Medicare Advantage may be the better option for you. But you can also add Medigap to your Original Medicare plan, which introduces annual spending limits.

These limits apply to Part A and Part B medical services. Part D, which includes prescription drug spending, has a separate $2,100 out-of-pocket cap in 2026, regardless of which Medicare plan you select.

While Medicare Advantage sets maximum limits, plan providers may opt to set their limits below the ones Medicare establishes. Currently, Medicare Advantage plans have an in-network maximum of $9,250. Plans that cover in- and out-of-network options have a combined $13,900 spending cap.

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Why the provider network can change the math

A plan with low limits may seem attractive on the surface, but if it doesn’t have any of your preferred doctors, hospitals or specialists in the plan, it isn’t as valuable as it appears. Medicare Advantage members may also have to rely on in-network options for non-emergency care if they want coverage. Out-of-network options are available for some plans at higher costs.

It’s normal for Medicare Advantage members to cover out-of-network costs. KFF reported that 61% of individual Medicare Advantage drug-plan enrollees are in HMOs, which typically do not cover out-of-network costs. Preferred provider organizations (PPOs) are more flexible but have higher costs.

Medicare Advantage and the HMOs that offer plans may come with better costs, but you should check specific doctors, hospital and high-use specialists against the current plan directory before enrolling. The in-network providers in a new plan may be very different from your current plan.

Prior authorization can affect access

Prior authorization adds extra complexity to a Medicare Advantage plan that you typically won’t get with Original Medicare, and means a healthcare provider may need approval from your insurance company before beginning services. This precheck helps the insurer determine that the medication, procedure or drug is necessary, safe and priced appropriately.

This setup can delay your access to treatments and procedures for up to seven days, but the timeframe is cut down to a maximum of 72 hours for emergencies. Most people get accepted, but 7.7% of Medicare Advantage prior authorization requests were fully or partially denied in 2024, with only 11.5% of those denials getting appealed, according to KFF.