An out-of-pocket maximum is an upper limit on the total amount an insured individual can spend on healthcare costs. Once you have paid money equal to that limit, your health insurance will cover 100% of all costs. Your out-of-pocket maximum is an annual limit, meaning it resets each year. If you meet your out-of-pocket limit one year, you will pay again starting the next year.

Your plan may have multiple out-of-pocket maximums. This is most common when you have dependents on your plan. Often, prescription drugs also have their own out-of-pocket maximums.

How do out-of-pocket maximums work?

Throughout the year, some of the costs you pay for health care contribute towards your out-of-pocket limit. Once your total spent on eligible costs has reached your out-of-pocket limit, you no longer contribute towards healthcare costs. Your health insurance is then responsible for all (covered) health insurance costs that year.

Let’s explore your flow of healthcare costs, and how they interact with your out-of-pocket limit:

• First, you will generally have a deductible. Before you have met your deductible, you are responsible for almost all healthcare costs.
• Once you meet your deductible, you generally have a cost-sharing responsibility. This is usually done in the form of copayments and coinsurances. When you receive care, you pay an amount of the cost, and insurance covers the rest.
• When you reach your out-of-pocket maximum in the total you have spent, everything else is covered by insurance. You won’t pay for any care received after this point.

Which healthcare expenses count towards my out-of-pocket maximum?

Generally, the money you spend for care is the money that counts towards your maximum. Some of these costs include:

• Your deductible. All of the money you spend for care before your deductible is met counts towards your maximum.
• Copays and coinsurances. After the deductible, only your share of costs for care counts towards your out-of-pocket maximum. The insurance companies share of costs does not contribute towards your out-of-pocket limit.
• Prescribed medication. Medication that your doctor prescribes, usually picked up at the pharmacy, may count towards your out-of-pocket maximum. However, prescription medication often has its own out-of-pocket limit.

An important note is only covered services count towards your out-of-pocket maximum. Consult your plan details to find coverage information.

Which expenses don’t count towards my out-of-pocket maximum?

Typically, costs for your health insurance coverage don’t count towards your out-of-pocket limit. Some care you receive will also not count towards your out-of-pocket limits. Some of these expenses include:

• Plan premiums. Any money spent on your monthly premium does not contribute towards your maximum.
• Services not covered by insurance. Any you receive care excluded from your health insurance coverage does not count towards the out-of-pocket limit. You will also pay full for those services.
• Costs above the allowed amount. The allowed amount is the most that insurance will pay for a service. If the hospital or doctor charges over that amount, insurance will not cover it. If it is not covered, it will not count towards your maximum.
• Out-of-network care. Most of the time, out-of-network care is not covered by insurance. This means any care received out-of-network also doesn’t count towards your maximum. However, some plans may have a separate deductible, cost-shares, and out-of-pocket max for out-of-network care.
• Most preventive care. Preventative care is usually covered by insurance at 100%, regardless of the amount you’ve paid that year. Since you do not pay for this care, it does not count towards your out-of-pocket maximum.

Do all health plans have an out-of-pocket maximum?

No, not all plans have an out of pocket maximum. All health plans that meet the Affordable Care Act (ACA) Standard do, however. ACA Plans are required to have an out-of-pocket limit below or equal to:

• $9,200 for individuals in 2025
• $18,400 for families in 2025

Plans outside of the ACA Marketplace that do not meet those standards may not have a maximum. Due to this, it is recommended to read plan details and compare plans before enrolling.

What’s the difference between an individual and family out-of-pocket maximum?

When a health plan covers more than one person, you often have multiple maximums. They are typically separated into individual maximums and family maximums.

When one individual on the plan reaches the individual out-of-pocket maximum, insurance will start paying 100% of costs. That individual will be covered for the rest of the plan year. Any expenses individuals pay going forward also contribute towards the family out-of-pocket limit.

When the costs of care between all individuals covered reach the family out-of-pocket maximum, insurance covers costs going forward.

Do most people meet their out-of-pocket maximum?

Everybody has very different health needs. The health plan you choose, and how you use it, depends on those health needs. Some people hardly even meet their deductible, some need extensive care and do meet their out-of-pocket max. Here are some things to consider when determining the importance of an out-of-pocket maximum to you:

• If you are in good health, and rarely see a doctor, the out-of-pocket limit is likely less important for you.
• If you require regular or extreme care, an out-of-pocket maximum could save you money.
• If you have multiple dependents, such as children, on your plan, an out-of-pocket maximum could be important. Care for multiple individuals can add up quickly.

Having an understanding of your costs will help you plan for the future. You will know how best to use your health coverage. If you still feel that you need help navigating your health plan, give us a call. We’re here to advocate for you and save you money. Additionally, if you feel as though your plan is not the right fit for you, we can help! We are nationally licensed and appointed with many of the top providers. We can compare between the best plans in your area and get on fit for you.