AARP Is Pushing a Bill That Would Cap What Medicare Costs You at $5,000 a Year

AARP is encouraging Congress to pass the Medicare Cost Cap Act of 2026, helping seniors save money in retirement. The bill would limit the out-of-pocket costs for original Medicare enrollees, which could be particularly important for enrollees who are hospitalized or face a serious illness resulting in potentially devastating costs.

If passed, the bill might mean good news for seniors with original Medicare plans, helping them save money while still getting the care they need.

The problem of no cap on original Medicare

Medicare Advantage plans already have annual out-of-pocket limits that cap an enrollee's spending and protect them from high or unexpected costs. Medicare Part D drug plans and Medicare Advantage plans with drug coverage have a $2,100 cap in 2026 and a $2,400 cap in 2027.

For 2026, out-of-pocket spending for Medicare Advantage Part A and Part B is capped at $9,250 for in-network services. The limit for in-network and out-of-network services combined is $13,900. Medicare Advantage plans may also offer lower caps, and KFF reports that the average cap for 2026 is $5,421 in-network and $9,825 out-of-network.

That's not the case for original Medicare plans (Parts A and B). These plans have no out-of-pocket maximum, so an enrollee's cost sharing could continue throughout the entire year, no matter how high their health care expenses get.

The terms of the Medicare Cost Cap Act

The Medicare Cost Cap Act proposes limiting out-of-pocket costs for Part A hospital services and Part B outpatient care. If enacted, the bill would limit Part A and Part B costs to $5,000 in 2028. The cap would increase in subsequent years as spending naturally grows over time.

The cap doesn't include premiums, but it does include expenses like deductibles, copayments, and coinsurance.

Fifteen Democratic Senators introduced the bill, including Chuck Schumer, Ron Wyden, Edward Markey, Elizabeth Warren, Tammy Duckworth, Peter Welch, Kirsten Gillibrand, and Alex Padilla.

AARP support for the Medicare Cost Cap Act

The bill has garnered support from multiple sources. Researchers at Brown University estimate that the cap could save enrollees an average of $1,255 per year.

Nancy LeaMond, Executive Vice President and Chief Advocacy and Engagement Officer at AARP, sent a letter of support for the bill. "For the nearly 35 million older Americans with Original Medicare, a single hospital stay or serious illness can be financially devastating," she wrote. 

"Capping out-of-pocket costs in Medicare Part A and Part B would protect these Americans from the kind of catastrophic medical bills no one should face."

Additional support for the bill

Numerous other organizations have sent statements of support. "People with Medicare deserve the same basic protection from catastrophic costs that every other insurance plan in America already provides," wrote Nicole Joric, Chief Program Officer at Caring Across Generations. 

"The Medicare Cost Cap Act is a common-sense step toward making sure that a serious illness doesn't also mean financial ruin, and importantly that low-income seniors aren't buried under paperwork just to access the help they've already earned."

The bill has also received support from Social Security Works, Just Care USA, Center for Medicare Advocacy, the Center for Health and Democracy, the American Economic Liberties Project, and more.

The scale of the bill's potential impact

Capping original Medicare out-of-pocket costs could potentially have a major impact on millions of enrollees. According to research by Brown University's Center for Advancing Health Policy Through Research, approximately 3.2 million original Medicare enrollees may exceed the proposed spending cap in 2028. 

That same population could potentially benefit from the new cap several times, since 52.3% of the population is estimated to likely exceed a $5,000 cap over 10 years. Additionally, 17.6% of the population would likely exceed the $5,000 cap at least three times.

The bill may have the greatest impact on older adults and those with serious health issues. It may help boost financial security and offer extra peace of mind for adults on a fixed or low income who can't easily absorb major unexpected health care expenses in a single year.

How enrollees may manage the risk currently

Medigap plans offer some protection against Original Medicare's lack of a spending cap. Medigap plans are a form of supplementary insurance that helps cover the expenses that Medicare Part B doesn't pay.

Medigap plans come with their own annual premiums in addition to Original Medicare premiums. If a cap on Original Medicare is implemented, it's possible that Medigap premiums might drop, since the plans wouldn't need to cover any expenses above the cap.

Bottom line

At this time, the Medicare Cost Cap Act of 2026 has been sent to the Finance Committee. Whether it becomes law depends on how the House and Senate decide to vote.

The bill might provide some important financial relief for Original Medicare enrollees, and it highlights how health care costs may fluctuate and the importance of having an emergency savings fund. Covering unexpected costs may be particularly difficult for retirees on a fixed income, so this may be a good time to revisit your retirement plan and make sure you've built in substantial savings for unexpected expenses.

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