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You know my rule is to always hope for the best and plan for the worst. When it comes to your health, I think many of you may not be carefully planning for a year (or more) where you have high medical expenses. I bet you know exactly what your health insurance premiums cost you, whether your insurance is through your job or you have your own ACA plan.

But your insurance doesn’t cover every expense, right? I know you know that, but have you really planned for a year when your household has a medical emergency, or just a lot of tests or care to deal with an illness or injury? Your deductible, copays, and coinsurance can add up to thousands of dollars a year that you are 100% responsible for.

A recent report showed that when someone had a serious accident requiring hospitalization, the out-of-pocket costs meant that 18 months later, that household had a significantly higher chance of having medical debt. If that debt was on a credit card, the cost of paying for that injury was likely being charged interest of 20% or more.

What catches so many households off guard is not fully understanding their annual Maximum Out-Of-Pocket (MOOP) cost. As long as you stay in a plan’s network, your MOOP is the total annual amount you will need to pay in a given year.

  • MOOP FOR WORKERS: If you have coverage through work or an ACA plan, the maximum allowable MOOP for an individual in 2026 is $10,600 ($21,200 for family coverage). Check your plan; many employers impose much lower MOOPs of around $4,500 for an individual. If you have a family plan, you also need to confirm whether the MOOP is per-person or for the entire family.
  • MOOP FOR MEDICARE ADVANTAGE: If you are enrolled in a Medicare Advantage plan, your MOOP in 2026 may be as high as $9,250 for in-network care. Your plan may have a much lower limit, but even at half that amount, you are looking at a potential annual cost of more than $4,000. (If you use services outside of your plan’s network, your MOOP can be higher.)
  • MOOP FOR ORIGINAL MEDICARE: For those with Original Medicare, you know my advice is that you must also have a supplemental Medigap policy. Original Medicare covers 80% of Part B expenses, but there is no dollar limit on the other 20% you owe. A good Medigap policy is crucial to cover most or all of the 20% for doctor appointments, tests, and other care that falls under Part B, which you are responsible for.

I want you to confirm ASAP what your household’s entire MOOP exposure is. Then it’s time to stand in your truth: Is there enough in your emergency savings account to cover the maximum MOOP for at least two years? Why two years? Because illness and injury don’t follow a calendar. An injury in October might cause you to hit your annual MOOP, and if care continues into the following January, your out-of-pocket costs start all over again for the new year. Please do your best to make sure you always have cash ready to cover those expenses.

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    Categories: Emergency Funds, Health Insurance, Insurance, Saving