An out-of-pocket maximum is the most you’ll ever have to pay in one year for healthcare services your insurance covers. Once you hit that limit—by paying for things like deductibles, copayments, and coinsurance—your health insurance will take care of 100% of the costs for covered, in-network services for the rest of the year.
This limit helps protect you from spending too much on medical care. It sets a clear boundary so you know the maximum amount you might pay, no matter what happens. For example, in 2022, the out-of-pocket maximum for a Marketplace plan is $8,700 for an individual and $17,400 for a family.
These limits are especially helpful in years when you need a lot of treatment. But be careful—not everything counts toward this limit. So it’s important to understand what’s included and what’s not, or you could end up with an unexpected bill.
What Counts Toward the Out-of-Pocket Maximum?
In general, the following costs do count:
- Deductibles (what you pay before insurance kicks in)
- Copayments (fixed fees for things like doctor visits)
- Coinsurance (your share of the cost after meeting the deductible)
But here’s what doesn’t count:
- Your monthly insurance premium
- Costs for services not covered by your plan
- Charges from out-of-network providers
- Anything above the allowed amount your plan agrees to pay
So even if you hit your out-of-pocket maximum, you’ll still need to pay your monthly premium and any costs for services not covered by your insurance. Also, using out-of-network providers can make things more expensive, and those costs usually don’t count toward your limit.
Let’s say you pay $2,000 for an elective surgery that’s not covered by your plan. That $2,000 won’t go toward your out-of-pocket maximum. So yes, it’s possible to spend more than the limit in some situations.
Also Read: What is a Network Provider in Health Insurance?
Government Limits on Out-of-Pocket Maximums
The government sets a cap on how high your out-of-pocket maximum can be, at least for Marketplace plans. For example:
- In 2022, the limit is $8,700 for an individual and $17,400 for a family
- In 2021, it was $8,550 for an individual and $17,100 for a family
Choosing the Right Plan
Different health plans have different out-of-pocket maximums. In general, a lower out-of-pocket maximum means less financial risk for you—but these plans often come with higher monthly premiums.
For example:
- Bronze and Silver plans usually have lower premiums but higher out-of-pocket limits
- Gold and Platinum plans have higher monthly premiums but lower out-of-pocket limits
So it’s a trade-off: lower premiums = more you might pay later; higher premiums = more coverage upfront.
What Are Cost-Sharing Reductions?
If you have a lower income, you might qualify for cost-sharing reductions (CSRs) that lower how much you pay out of pocket. These are available only if you choose a Silver plan on the Marketplace and meet certain income requirements.
Here’s what CSRs can do:
- Lower your deductible (e.g., from $750 to $300 or $500)
- Reduce your copayments or coinsurance
- Lower your out-of-pocket maximum (e.g., from $5,000 to $3,000)
There are also special rules for American Indians and Alaska Natives that offer additional savings.
Also Read: How does an HMO differ from a PPO plan?
Out-of-Pocket Maximum vs. Deductible
Your deductible is what you pay before your insurance starts covering costs. After you hit your deductible, you may still have to pay part of the bill through coinsurance. These payments all count toward your out-of-pocket maximum.
Once you reach that maximum, your insurance will cover 100% of all covered expenses for the rest of the year.
Example: How It Works
Let’s say your plan has the following:
- $6,000 out-of-pocket max
- $4,500 deductible
- 40% coinsurance
Now imagine you need a surgery that costs $10,000:
- First, you pay your $4,500 deductible.
- That leaves $5,500.
- You’re responsible for 40% of that, which is $2,200.
But since your out-of-pocket max is $6,000, and you’ve already paid $4,500, you’ll only need to pay $1,500 more. Your insurance will pay the rest.
So, your total cost for the surgery ends up being $6,000, and everything after that (like follow-up visits) will be fully covered for the rest of the year—as long as they’re in-network and covered by your plan.
