New Bill Would Cap Traditional Medicare Out-of-Pocket Costs at $5000

US Senators Lisa Blunt Rochester (D, Delaware), Ron Wyden (D, Oregon), and Chuck Schumer (D, New York) introduced the Medicare Cost Cap Act on June 25, which would create a $5000 cap on out-of-pocket costs for traditional Medicare beneficiaries.¹

Proposed Out-of-Pocket Cap Aims to Align Medicare Coverage

Traditional Medicare does not currently have a limit on out-of-pocket costs, meaning beneficiaries may face unlimited health care costs if they are faced with serious illness or hospitalization. By contrast, Medicare Advantage (MA), insurance bought on the marketplace, and employer-sponsored insurance all have annual out-of-pocket spending caps.

Therefore, the senators claim an out-of-pocket cap would “level the playing field” between traditional Medicare and MA, guaranteeing all Medicare beneficiaries are protected regardless of which coverage option they choose.

Looking ahead, 3.2 million Medicare beneficiaries are projected to directly benefit from an out-of-pocket cost cap in 2028, with over 52% expected to exceed the proposed $5000 cap at least once over the next 10 years. Consequently, the proposed plan would save enrollees $1024 annually.

“Traditional Medicare is America’s flagship health care program, and it must be strengthened for the millions of seniors who count on it for affordable care,” Wyden said in a news release. “This legislation will put an end to the financial nightmare facing too many seniors with traditional Medicare who experience a major medical event.”

Legislation Seeks to Reduce Barriers, Expand Financial Protections for Low-Income Beneficiaries

Although financial support exists for low-income Medicare enrollees, which include both seniors and people with disabilities, extensive administrative barriers prevent and discourage them from accessing these resources. As a result, over half a million individuals who qualify for Medicare Savings Programs (MSPs) are not enrolled, leading to higher out-of-pocket costs and missed benefits for these financially insecure Americans.

To help combat this, the newly announced legislation would also improve assistance and enhance programs protecting low-income Medicare beneficiaries, like seniors and people with disabilities who already rely almost exclusively on their Social Security benefits, from rising premiums and out-of-pocket costs.

"Americans spend their entire working lives paying into Medicare, but those with traditional Medicare are the only group not protected from financial ruin,” Blunt Rochester said in a news release. “This bill modernizes Medicare, lowers costs, and brings peace of mind to the millions of seniors and those with disabilities who rely on this program. No one should be one health emergency away from going bankrupt, and establishing an out-of-pocket cap in traditional Medicare gives more seniors and those with disabilities the same financial protections that almost every other American enjoys."

Bill Receives Broad Democratic Support, Building on Prior Medicare Cost-Cutting Efforts

This is the latest effort by Democratic senators to cut costs for Medicare enrollees. During the Biden administration, they secured a $2000 out-of-pocket cap on prescription drug costs in Part D plans, a $35 monthly cap on insulin co-pays, and no-cost vaccines for seniors and people with disabilities on Medicare.²

Additional senators cosponsoring the legislation included Jeff Merkley (D, Oregon); Ben Ray Luján (D, New Mexico); Edward J. Markey (D, Massachusetts); Elizabeth Warren (D, Massachusetts); Jack Reed (D, Rhode Island); Tammy Duckworth (D, Illinois); Peter Welch (D, Vermont); Cory Booker (D, New Jersey); Kirsten Gillibrand (D, New York); Alex Padilla (D, California); Chris Van Hollen (D, Maryland); and Patty Murray (D, Washington).¹

References

1. Blunt Rochester, Wyden, Schumer lead legislation to cap Medicare costs for seniors. News release. US Senate Committee on Finance. June 25, 2026. Accessed June 29, 2026. https://www.finance.senate.gov/ranking-members-news/blunt-rochester-wyden-schumer-lead-legislation-to-cap-medicare-costs-for-seniors
2. Wyden cheers lower drug prices for seniors through Medicare negotiation. News release. US Senate Committee on Finance. August 15, 2024. Accessed June 29, 2026. https://www.finance.senate.gov/chairmans-news/wyden-cheers-lower-drug-prices-for-seniors-through-medicare-negotiation