Will Your Max Out Of Pocket Max Out Your Pocket?

Your Out-of-Pocket Maximum: The Number That Protects Your Wallet

Most people shopping for health insurance look at the monthly premium first, then the deductible. But one of the most important numbers on any plan is easy to overlook: the out-of-pocket maximum. It’s the number that tells you the most you could spend on covered care in a bad year, and it can make the difference between an expensive year and a financially devastating one.

What Is an Out-of-Pocket Maximum?

Your out-of-pocket maximum (sometimes called an out-of-pocket limit) is the most you’ll pay for covered, in-network care during a plan year. Once you reach it, your plan pays 100% of covered, in-network costs for the rest of that year.

Think of it as a ceiling. Your deductible, copays, and coinsurance all add up as you receive care, but they stop at that ceiling.

What Counts Toward It?

For most comprehensive plans, these count toward your out-of-pocket maximum when they’re for covered, in-network services:

Your deductible: Every eligible dollar you pay toward your deductible also counts toward your maximum.
Copays: The fixed amounts you pay for things like office visits or prescriptions.
Coinsurance: Your percentage share of costs after you’ve met your deductible.

What Doesn’t Count?

This is where many people get surprised. Your out-of-pocket maximum generally does not include:

Your monthly premiums. You keep paying these all year, even after you’ve hit your maximum.
Services your plan doesn’t cover.
Out-of-network care, unless your plan includes out-of-network benefits with a separate limit.
Charges above the plan’s allowed amount, when a provider can legally bill you for the difference.

So while your out-of-pocket maximum is a powerful protection, it isn’t a cap on every health-related expense.

An Example

Imagine a plan with a $3,000 deductible, 20% coinsurance, and a $7,000 out-of-pocket maximum. During the year you need surgery and follow-up care totaling $50,000 in covered, in-network costs.

You pay the first $3,000 to meet your deductible.
You pay 20% of the next costs while your plan pays 80%, until your coinsurance adds another $4,000.
You’ve now paid $7,000 and reached your out-of-pocket maximum.
Your plan pays 100% of covered, in-network costs for the rest of the plan year.

Out of $50,000 in care, your share is $7,000, plus your premiums. Without that ceiling, a 20% share alone could have been far higher.

Individual vs. Family Maximums

Family plans usually have two limits: one for each person and a higher one for the whole family. Once any one person reaches the individual limit, the plan typically covers that person’s covered, in-network costs in full, even if the family as a whole hasn’t reached the family limit. When the family’s combined spending reaches the family limit, everyone on the plan is covered in full for the rest of the year. Check your plan’s details, because the specifics can vary.

Is There a Legal Limit?

Yes. Most comprehensive plans, including Marketplace and most employer plans, can’t set an in-network out-of-pocket maximum higher than a federal limit that’s updated every year. Some types of coverage, such as short-term plans and certain older “grandfathered” plans, don’t have to follow that limit, which is one more reason to read the fine print.

Ask yourself: if you had a serious accident or illness this year, could you cover your out-of-pocket maximum? If the answer is no, a plan with a slightly higher premium but a lower maximum may be worth it. On the other hand, if you’re generally healthy and have savings set aside, a plan with a lower premium and higher maximum might make sense, especially if it’s paired with a Health Savings Account (HSA).

The right balance depends on your health, your budget, and how much risk you’re comfortable with.