Medicare has just locked in the dollar ceiling a Medicare Advantage plan is allowed to charge enrollees in 2027, and the number is higher than what plans could charge this year. For anyone who ends up needing extensive hospital or specialist care, the figure that matters most is not the monthly premium. It is the point at which the plan, rather than the enrollee, starts covering the rest of the bill. Two separate ceilings apply depending on whether the care stays inside the plan’s network or crosses into out-of-network territory, and the gap between them is wide enough to reshape a retiree’s savings in a single bad year.
What CMS Just Finalized for 2027
Medicare Advantage plans set an annual limit on what an enrollee pays out of pocket for covered services, the single number that caps how bad a costly year can get once it is reached. CMS does not leave that ceiling to each insurer’s discretion. It sets a maximum every plan is allowed to charge, publishes the figure a year in advance, and revisits it annually as medical costs rise.
The Centers for Medicare & Medicaid Services published its Final Contract Year 2027 Part C Bid Review Memorandum on April 22, 2026, and it sets the top of the “mandatory” maximum out-of-pocket range at $9,850 for care delivered by in-network providers. For PPO plans, which are allowed to pay some out-of-network claims, the combined ceiling covering both in-network and out-of-network spending together climbs to $14,800. Those numbers are ceilings, not fees — a plan cannot legally set its out-of-pocket maximum above them, though nothing stops a plan from setting a lower one.
That is an increase from what CMS finalized for the current plan year. The Final CY2026 Part C Bid Review Memorandum capped the mandatory in-network limit at $9,250 and the combined limit at $13,900. Moving into 2027, that is a $600 jump on the in-network side and a $900 jump on the combined side — both increases landing on the enrollees who end up needing the most care in a given year, since someone who stays healthy and needs little treatment never comes close to either ceiling.
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Why There Are Two Different Ceilings
The split between the in-network figure and the combined figure only matters to people enrolled in a PPO, since HMO and HMO Point-of-Service plans generally do not cover out-of-network care except in emergencies, and their out-of-pocket maximum applies only to in-network costs. A PPO enrollee who sees an in-network cardiologist and has surgery at an in-network hospital is protected once their spending hits $9,850. But if that same person, for whatever reason, ends up treated by an out-of-network specialist or at an out-of-network facility, those costs count toward the higher $14,800 ceiling instead — and get there more slowly, because out-of-network cost sharing is typically steeper per visit. In effect, a PPO enrollee who strays outside the network absorbs nearly $5,000 more in exposure before the plan takes over completely.
The Ceiling Most Plans Never Reach
Few plans actually charge the maximum CMS allows. Enrollment-weighted data compiled by KFF’s 2026 Medicare Advantage report found the average in-network out-of-pocket limit across all plans sits around $5,421 — HMOs averaging closer to $4,636 and PPOs closer to $6,592 — well beneath the $9,250 ceiling CMS allowed for that year. Insurers compete on this number because a lower out-of-pocket maximum is a selling point during open enrollment, even when it comes paired with a higher monthly premium or a narrower provider network. The federal maximum functions as a backstop against the worst-case plan design, not a preview of what most people will actually pay.
Three Tiers, Same Underlying Rule
CMS does not hand every plan the same number to work with. Plans fall into a Lower, Intermediate, or Mandatory MOOP tier, and each tier carries its own dollar range; for 2027 the Lower tier tops out at $4,450 in-network, while the Mandatory tier — the one that produces the widely cited $9,850 figure — runs up to that ceiling. A plan’s tier placement affects what other benefit trade-offs CMS allows it to make, a mechanism explained in more detail by the nonprofit consumer group Medicare Interactive. The practical takeaway for an enrollee is that two plans from the same insurer, in the same county, can carry meaningfully different out-of-pocket maximums depending on which tier each one was built around.
What to Check Before Fall Enrollment Opens
The 2027 ceiling does not take effect until January, but insurers are already building next year’s plan documents around it, and the Annual Notice of Change letter that arrives every September is where the real number shows up — not the CMS memo, which sets only the outer limit. Anyone comparing Medicare Advantage plans this fall should locate the plan’s actual out-of-pocket maximum in that notice or in the Evidence of Coverage, note whether it is a single in-network figure or a combined in-network-and-out-of-network figure, and weigh that against how often they see specialists outside their plan’s network. A plan sitting near the $9,850 ceiling is not automatically a bad deal, but it is a materially different financial commitment than one sitting near the $5,000 average, and that difference only shows up to someone who actually opens the letter.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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