An out-of-pocket maximum is a cap, or limit, on the amount of money you have to pay for covered health care services in a plan year. If you reach that limit, your health plan will pay 100% of all covered health care costs for the remainder of the plan year. Some of the health insurance plans call it an out-of-pocket limit. A plan year consists of the 12 months between the date your coverage goes into effect and the date it ends.
If you have dependents on your plan, you may have individual out-of-pocket maximums and a family out-of-pocket maximum. This depends on the conditions of the plan.
How does the out-of-pocket maximum work?
The costs you pay for your covered health care services count toward your out-of-pocket maximum. This could include the costs that count toward your plan’s deductible and coinsurance. Any copay you owe when you visit doctors may also be included.
Here’s an example of how an out-of-pocket maximum might work, depending on your health plan:
- Juana G. has a health plan with a $ 2,500 deductible, 20% coinsurance, and a $ 4,000 out-of-pocket maximum.
- At the beginning of your plan year, you have an unexpected illness. See your doctor and various specialists regularly. You must have a lot of medical tests.
- You receive a medical bill totaling $ 2,500 and pay the costs. This meets your deductible. Since you pay out of pocket, it also counts toward your out-of-pocket maximum.
- You continue to see specialists regularly and should have another round of testing.
- You pay 20% coinsurance and your share of medical costs, while your health plan pays the remaining 80%. His bill totals $ 1,500. This also counts toward your out-of-pocket maximum.
- At this point, Juana has spent a total of $ 4,000 and has reached her maximum out-of-pocket.
- Now, your health plan will begin to pay 100% of your costs for covered care for the remainder of the plan year.
What types of health care expenses count toward an out-of-pocket maximum?
The following are health care expenses that often count toward an out-of-pocket:
- Deductible: These are costs you pay out of pocket and count toward your deductible. Since most plans cover all costs for preventive care, these costs are generally for in-network covered care that is not preventive. Some plans may not allow your deductible to count toward the out-of-pocket maximum. Check the details of your plan.
- Coinsurance: Once you meet your deductible, your health plan begins to share the costs with you. This is your coinsurance. Your share of these costs also counts toward your out-of-pocket.
Are there any expenses that do not count toward an out-of-pocket maximum?
There are several expenses that would not count toward an out-of-this:
- Care and services that are not covered: Your health plan may not cover some services. These may include cosmetic treatments, weight loss surgery, and some alternative medicines.
- Costs over the allowable amount: Most plans set an allowable amount for various services. If a doctor or institution charges more than that amount, your plan won’t cover that cost. This means that it will also not count towards your out-of-this. Be sure to check the details of your plan.
- Out-of-Network Care and Services: Most health plans have a network of doctors. These physicians agree to offer discounted rates to plan customers using their services. If you visit doctors or institutions that do not participate in your plan’s network, your costs may not be covered. * What you pay for out-of-network care may not count toward your out-of-pocket maximum. You must make sure the providers are in your plan’s network before visiting them.
- Plan premiums: If you purchase a health plan on your own and not through your employer, in general, you have a monthly plan premium. This cost does not count toward your out-of-pocket maximum.
- Most preventive care: Many health plans cover most preventive care at 100%, as part of the Affordable Care Act (ACA). These are routine care, such as an annual check-up, some lab tests, flu shots, and some other vaccinations, and routine check-ups, such as a yearly mammogram and colonoscopy. Your health plan pays for these preventive services, therefore those costs do not count toward your out-of-pocket maximum.
- Plan deductibles (in some cases): For some health plans, the out-of-pocket maximum may not include the costs that apply to your deductible. Make sure you know the details of your health plan when choosing coverage.