A $0-premium Medicare Advantage plan can look appealing at first glance. You may see no monthly plan premium and assume your costs will be minimal.
But the premium is only one part of the financial picture. The number you should read just as carefully is the plan’s maximum out-of-pocket limit (MOOP). The most you may have to pay for covered services under the plan during the year.
For contract year 2027, the maximum in-network MOOP limit Medicare Advantage plans may charge is $8,850. Plans may set a lower limit, and many do. The important point is that a $0 premium does not mean $0 cost sharing.
What the $8,850 maximum means
The MOOP is the most you pay for covered, in-network Medicare Advantage services during a plan year before the plan pays 100% of covered in-network costs for the remainder of that year.
Your payments toward deductibles, copayments, and coinsurance for eligible covered services generally move you closer to that limit. Once you reach the plan’s MOOP, the plan pays 100% of covered in-network services for the rest of the plan year.
However, the details matter.
Services you receive out of network may not count toward the in-network maximum, or they may count differently under the plan’s combined maximum. Non-covered services do not count toward the MOOP at all. In other words, reaching the ceiling does not make every healthcare service free.
Always review how the specific plan defines its in-network and combined out-of-pocket limits in the Summary of Benefits and Evidence of Coverage.
$0 premium is not the same as $0 cost
The plan premium is what you pay each month to maintain the coverage, whether or not you use healthcare services.
The out-of-pocket maximum is different. It represents your potential exposure if you need significant care during the year.
Consider the difference:
- Plan A: $0 monthly premium and an $8,850 in-network MOOP.
- Plan B: A modest monthly premium and a $4,500 in-network MOOP.
These are different financial products. Plan A may cost less during a year when you use little care, but Plan B may provide a lower ceiling in a year involving hospitalization, surgery, rehabilitation, or other substantial treatment.
Neither structure is automatically right or wrong. Your health needs, prescriptions, doctors, hospitals, budget, and tolerance for financial risk should all be part of the comparison.
CMS publishes different MOOP ranges
The $8,850 figure is a maximum allowed limit for 2027 in-network cost sharing, not a requirement that every plan charge that amount.
CMS publishes in-network and combined MOOP ranges by plan type. For example, intermediate HMO and HMO-POS plans range roughly from $4,451 to $7,150, while mandatory plans range roughly from $7,151 to $9,850.
The plan available to you may have a lower MOOP than the maximum. That is why comparing the actual plan documents for your county is more useful than relying on the premium displayed in an advertisement.
Your real exposure depends on more than the MOOP
The MOOP is an important safety net, but it does not tell you what routine care will cost. Before enrolling, review these variables:
Deductibles
A deductible is the amount you may need to pay before the plan begins sharing costs for certain services. Some plans have separate deductibles for medical services and prescription drugs.
Copayments and coinsurance
A copayment is a fixed amount, such as a set charge for a visit. Coinsurance is a percentage of the allowed cost. A plan with a low premium may use higher cost sharing for certain services.
Prior authorization
Some plans require prior authorization before they will cover specific services, procedures, equipment, or stays. Prior authorization means the plan must approve the service in advance under its rules.
A service may be medically appropriate but still require the correct authorization process. Review the plan’s requirements and ask your providers how they handle them.
Doctors and hospitals
Your preferred doctor or hospital may not participate in every Medicare Advantage plan. Verify network status for 2027 rather than assuming that a provider who accepted your plan this year will remain in network next year.
You should also confirm whether your specialists, hospitals, laboratories, and other frequently used providers are included.
Prescription formularies and tiers
A formulary is the plan’s list of covered prescription drugs. Each medication may be placed in a different cost-sharing tier.
List every prescription you take and check the 2027 formulary, including the drug’s tier, quantity limits, prior authorization requirements, and any step-therapy rules. Also verify that your preferred pharmacy is in network.
Do not confuse the medical MOOP with the Part D limit
Medicare Advantage medical cost sharing and prescription drug cost sharing are related parts of your coverage, but they are not the same calculation.
For 2027, the Medicare Part D annual out-of-pocket threshold is $2,400. That threshold applies to covered prescription drug spending under Part D. It does not mean that your Medicare Advantage medical services have a $2,400 maximum.
Review both figures separately:
- The plan’s medical MOOP for covered services.
- The Part D annual out-of-pocket threshold for covered prescriptions.
Your total healthcare budget should account for both medical and prescription needs.
Extras are worth comparing, but not by themselves
Medicare Advantage plans may offer additional benefits such as dental, vision, hearing, fitness programs, over-the-counter allowances, or transportation.
These benefits can be valuable, particularly when you expect to use them. But an extra benefit should not cause you to overlook the plan’s cost structure.
For example, a dental allowance may have an annual limit, a restricted provider network, or coverage rules for specific services. An over-the-counter allowance may be available only for approved items and may expire under the plan’s terms.
Compare the extras alongside the premium, deductible, cost sharing, network, formulary, prior authorization rules, and MOOP, not instead of them.
How Original Medicare and Medigap work differently
Original Medicare paired with a Medicare Supplement Insurance policy (Medigap) uses a different cost structure.
Medigap helps pay certain Medicare cost-sharing amounts, such as copayments, coinsurance, and deductibles, depending on the policy. It does not use an annual out-of-pocket maximum structure in the same way Medicare Advantage does.
If you are considering a future move from Medicare Advantage to Original Medicare with Medigap, do not assume you will always be able to purchase a Medigap policy on identical terms. Depending on your circumstances and your rights, switching later can involve medical underwriting in most states.
That does not mean a change is impossible. It means you should investigate your eligibility, timing, and protections before leaving one type of coverage for another. You can review general information through Medicare.gov’s Medigap resource.
A practical three-scenario test
During the Medicare Annual Enrollment Period, model three possible years for each plan:
1. A good year
Estimate the plan premium and the routine costs you would expect if you used little healthcare.
2. A moderate year
Add the premium, primary care visits, specialist visits, prescriptions, testing, and other routine services you are reasonably likely to use.
3. A bad year
Add the annual plan premium to the plan’s medical out-of-pocket maximum. Then separately consider your prescription drug exposure under Part D.
This exercise does not predict your exact costs. It helps you compare the financial shape of each plan instead of focusing only on the $0 headline.
Your 2027 AEP comparison checklist
The Medicare Annual Enrollment Period for 2027 coverage runs from October 15 through December 7, 2026. Changes made during this period take effect January 1, 2027.
Before you enroll, make sure you:
- List your doctors and hospitals and verify their 2027 network status.
- List every prescription and check the 2027 formulary and drug tier.
- Confirm whether your preferred pharmacy is in network.
- Compare total annual exposure, not just the monthly premium.
- Review the plan’s MOOP and determine whether it applies only in network or also includes out-of-network spending.
- Check deductibles, copayments, and coinsurance for services you use.
- Review prior authorization and referral rules.
- Read your Annual Notice of Change (ANOC) and identify changes from your current plan.
- Confirm the plan will still be offered in your service area for 2027.
- Verify current plan information through Medicare.gov and the plan’s official documents.
We can help you compare the whole picture
At Total Benefit Solutions, we act as an independent advocate. We can review your Annual Notice of Change, compare Medicare Advantage and Medigap options, verify networks and formularies, and help you understand your potential exposure in a good, moderate, or bad year.
Our help is provided at no cost. We do not assume that a $0-premium plan is right for everyone, and we do not assume that a higher-premium plan is automatically better. We help you compare the trade-offs based on your situation.
Visit https://www.totalbenefits.net or call (215) 355-2121 to take the next step before the December 7 deadline.
Educational disclaimer: Plan benefits, premiums, networks, formularies, out-of-pocket limits, and availability vary by plan, carrier, county, and individual circumstances. This article is not individualized medical, legal, tax, or financial advice. Verify details with Medicare.gov and the plan before enrolling.
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