15 U.S. senators, including New York's Kirsten Gillibrand, have introduced legislation that would create a $5,000 cap on out-of-pocket costs for Traditional Medicare (Parts A and B) beneficiaries. Currently, Traditional Medicare does not have a limit on out-of-pocket costs, meaning beneficiaries are confronted with unlimited, catastrophic health care costs if they face serious illness or hospitalization. Medicare Advantage (MA), employer-sponsored insurance, and insurance bought on the marketplace all have annual caps on out-of-pocket spending. Gillibrand says an out-of-pocket cap would level the playing field between Traditional Medicare and MA and guarantee that all people with Medicare are protected, no matter what coverage option they choose.
The legislation would also enhance programs that protect low-income Medicare beneficiaries, shielding seniors and people with disabilities who already rely almost exclusively on their Social Security benefits from rising premiums and out-of-pocket costs. In 2028, 3.2 million Medicare beneficiaries are projected to directly benefit from an out-of-pocket cost cap. Over the next 10 years, over 52% of beneficiaries are expected to exceed the proposed $5,000 cap at least once. On average, this plan would save enrollees $1,024 per year.
