Different amounts factor into your out-of-pocket maximum, including:
Deductible: This is the dollar amount you owe for covered medical services before your health plan starts to pay.Coinsurance: A coinsurance is your share of costs for covered medical services, typically calculated as a percentage of the balance after paying your deductible. Coinsurance stops when you hit your out-of-pocket limit, so you won’t continue paying when you reach this amount.Copay: A copay is the fixed dollar amount you pay for covered health care services after paying your deductible. It may apply to services like prescription drugs, doctor visits, and lab tests.
Each year, the Affordable Care Act limits a consumer’s costs for services covered through Health Insurance Marketplace plans. For 2023, the out-of-pocket maximum for marketplace plans can’t exceed $9,100 for an individual plan and $18,200 for a family plan.
Metal Tier Levels
Health plans sold through the Health Insurance Marketplace are available in four metal tiers—Bronze, Silver, Gold, and Platinum—based on health care cost-sharing between you and the plan. Higher-tier plans pay a higher percentage of covered costs and therefore often have lower out-of-pocket maximums (relative to lower-tier plans). The table below shows how costs are shared among different plans: Bronze plans have the lowest premium, but you can expect to pay the highest out-of-pocket costs when you need care. Similarly, Platinum plans have the highest monthly premium, but you’ll pay the lowest out-of-pocket costs when you receive covered care.
Example of an Out-of-Pocket Maximum
Let’s say you’re enrolled in a health insurance plan with a $1,500 deductible, a $3,000 out-of-pocket maximum, and 20% coinsurance. Here’s how your out-of-pocket maximum will apply if you need knee surgery that costs $10,000: Your total cost would be $3,200 ($1,500 + $1,700), which exceeds your out-of-pocket maximum of $3,000. In this case, your insurer would pay for all covered benefits above $3,000 for the knee surgery and any covered medical care you receive during the rest of the plan year. An out-of-pocket maximum doesn’t include your premium, balance-billed charges, or medical services that your health insurance plan doesn’t cover.
Types of Out-of-Pocket Maximums
A family plan with several individuals will have an individual out-of-pocket maximum and a family out-of-pocket maximum.
Individual Out-of-Pocket Maximum
This is the total amount each insured person can pay for covered health care expenses. Once one individual hits this limit, the insurance plan takes up 100% of their covered benefits as other members continue paying their costs. Cost-sharing for the other individual members ceases when they reach either their individual out-of-pocket limit or the collective family out-of-pocket limit.
Family Out-of-Pocket Maximum
Usually twice the individual out-of-pocket maximum, the family out-of-pocket limit is what all family members collectively pay for deductibles, coinsurance, and copays when determining whether the limit has been reached. Once the family out-of-pocket maximum has been reached, the plan pays for all covered care even if one or more family members did not reach the individual out-of-pocket maximum.
Out-of-Pocket Maximum vs. Deductible
The monthly bill you pay to your insurance company is just the tip of the iceberg regarding total health care costs. You’ll need to factor in the deductible and the out-of-pocket maximum to estimate your total spending on health care. A deductible differs from your plan’s out-of-pocket maximum as it’s the amount you first pay toward covered health services before your insurer takes up covered costs thereafter. However, the deductible amount goes toward reaching the out-of-pocket maximum. Once the deductible has been met, you’ll pay coinsurance and copayments (or copays), depending on the type of care you receive. Coinsurance is usually a percentage of covered costs, while a copay is usually a flat dollar amount, such as $50. These collective payments along with your deductible count toward your out-of-pocket maximum.
