Out-of-Pocket Maximum
What is an Out-of-Pocket Maximum?
In the American healthcare system, an out-of-pocket maximum is the limit a person with health insurance will be required to pay for covered medical expenses each year.
Typically, out-of-pocket maximum limits include money spent on:
- Deductibles
- Copayments
- Coinsurance for in-network care and services
What Happens After the Out-of-Pocket Maximum is Met?
Once a person reaches their annual out-of-pocket maximum, their health insurance will pay 100% of the covered medical and prescription costs for the rest of the year.
Note: As mentioned below, the cost of the individual’s monthly premium payment does not count towards the out-of-pocket maximum. Individuals will be required to pay their monthly premium until they cancel or change their plan.
What is Not Considered an Out-of-Pocket Expense?
Not all healthcare expenses count towards the plan cost limit.
For example, the monthly premium that employees pay is not factored into the out-of-pocket maximum. In other words, even after the threshold has been met, employees will continue to pay their plan premium until they change or cancel their plan.
Other costs that don’t impact out-of-pocket limits include:
- Services that aren’t covered by the plan
- Out-of-network services
- Costs higher than the allowed amount for a service that a provider charges
Do You Still Pay a Copay After Out-of-Pocket Maximum is Reached?
For most health insurance plans, individuals are not required to make copayments once they’ve reached their maximum. With this in mind, the medical services must be covered by the plan.
What is Out-of-Pocket Maximum vs. Deductible?
A deductible is the amount a person pays each year for most eligible medical services or medications before their health insurance begins to contribute to the cost of covered services.
Meanwhile, the out-of-pocket maximum is the total amount an insured person will spend on their healthcare costs in a calendar year.