Traditional Medicare has deductibles, coinsurance without end, and no cap on out-of-pocket spending. The 2026 numbers make the exposure concrete.
Medicare is often described as comprehensive coverage for older adults. The cost-sharing structure tells a more complicated story, and the 2026 figures make it specific.
Part A
Part A carries no premium for “approximately 99% of Medicare beneficiaries” because they have at least 40 quarters of Medicare-covered employment. What it does carry is a deductible per benefit period rather than per year, plus coinsurance that begins after 60 days.
| Part A cost sharing | 2025 | 2026 |
|---|---|---|
| Inpatient hospital deductible | $1,676 | $1,736 |
| Daily coinsurance, days 61 to 90 | $419 | $434 |
| Daily coinsurance, lifetime reserve days | $838 | $868 |
| Skilled nursing facility daily coinsurance, days 21 to 100 | $209.50 | $217 |
Because the deductible resets with each new benefit period rather than annually, a beneficiary hospitalized twice in a year with enough time between stays pays it twice.
Part B
“The standard monthly premium for Medicare Part B enrollees will be $202.90 for 2026, an increase of $17.90 from $185.00 in 2025.” The annual deductible “will be $283 in 2026, an increase of $26 from the annual deductible of $257 in 2025.” After the deductible, the beneficiary generally pays 20 percent coinsurance on Part B services, with no ceiling.
Higher-income beneficiaries pay more. Income-related monthly adjustment amounts “affect roughly 8% of people with Medicare Part B,” rising in brackets to a total monthly premium of $689.90 for individuals with modified adjusted gross income at or above $500,000.
The structural gap
The critical fact is what the tables do not contain. Traditional Medicare “does not have an out-of-pocket limit, though purchasing a Medigap policy effectively provides protection from catastrophic costs.” Twenty percent coinsurance with no cap means that a beneficiary with a serious cancer diagnosis or a long hospitalization faces unbounded exposure. By contrast, “virtually all Medicare Advantage plans include an out-of-pocket limit for benefits covered under Parts A and B.”
Worth remembering: the missing out-of-pocket cap is the most consequential design gap in traditional Medicare, and it explains a great deal of behavior that otherwise looks irrational. It is why the supplemental insurance market exists, why employer retiree coverage was valuable enough to bargain for, and why a Medicare Advantage plan offering a hard out-of-pocket maximum at no additional premium is genuinely attractive rather than merely well-marketed. A comparison of the two systems that ignores this gap is not a fair comparison.
Key takeaways
- The 2026 Part A inpatient deductible is $1,736 per benefit period, not per year, with daily coinsurance beginning at day 61.
- The 2026 Part B premium is $202.90 monthly with a $283 annual deductible, then generally 20 percent coinsurance.
- Income-related adjustments affect roughly 8 percent of Part B enrollees.
- Traditional Medicare has no out-of-pocket maximum, while virtually all Medicare Advantage plans do.
Sources
Check your understanding
What happens to a traditional Medicare beneficiary with no supplemental coverage who has a catastrophically expensive year?
Traditional Medicare does not have an out-of-pocket limit. Purchasing a Medigap policy effectively provides protection from catastrophic costs, which is why most beneficiaries in traditional Medicare carry some form of supplemental coverage.