Out-of-Pocket Maximum Definition | OnlineHealthIns.com Glossary

Out-of-Pocket Maximum

Also known as: Out-of-Pocket Limit, OOP Max

The most you'll have to pay in a plan year for covered services before your health insurance starts paying 100% of covered costs.

The out-of-pocket maximum is the annual ceiling on what you can be required to pay toward covered care. It combines your deductible, copays, and coinsurance payments; once that combined total hits the cap, your health plan pays 100% of covered, in-network services for the rest of the plan year.

Premiums do not count toward the out-of-pocket maximum.
Out-of-network care and non-covered services usually don't count toward it either.
Family plans typically have both an individual out-of-pocket maximum and a higher family-level cap.

This cap exists as a financial safety net, especially important in years with a serious illness, surgery, or accident. Federal rules set a yearly ceiling on out-of-pocket maximums for ACA-compliant plans, though individual plans can set lower caps.

A common misunderstanding is thinking the out-of-pocket maximum includes premiums or out-of-network charges. It generally only counts in-network, covered cost-sharing, which is why going out-of-network can leave you with costs that never stop accumulating toward any cap.

Example

A member with a $6,000 out-of-pocket maximum has already paid $6,000 in deductible and coinsurance for a hospitalization; every additional in-network covered service that year is paid in full by the plan.

Good to Know

Out-of-network spending typically doesn't count toward the out-of-pocket maximum, so a plan's cap offers much less protection if you go outside its network.

Related Terms

Deductible — The amount you must pay out of pocket for covered care each year before your health plan starts sharing costs through copays or coinsurance.

Coinsurance — The percentage of a covered service's cost you pay after meeting your deductible, with your insurance plan paying the rest.

Copay (Copayment) — A fixed dollar amount you pay for a specific covered service, like a doctor visit or prescription, regardless of the service's actual cost.

Network (In-Network / Out-of-Network) — The group of doctors, hospitals, and other providers that have agreed to accept a health plan's negotiated rates; using providers outside that group usually costs more.