What Is an Out-of-Pocket Maximum? How It Works and Why It Matters
Last updated 05/04/2026 by
Ante Mazalin
Edited by
Andrew Latham
Summary:
An out-of-pocket maximum is the highest dollar amount you’ll pay for covered medical services in a plan year before your insurance company covers 100% of subsequent care.
Once you reach this limit, your insurer pays all remaining eligible healthcare costs for the remainder of the plan year.
- Includes deductibles and copays: Your annual deductible, copayments, and coinsurance all count toward the out-of-pocket maximum.
- Plan-specific: Each insurance plan sets its own out-of-pocket maximum, ranging widely based on plan type.
- Financial protection: Once reached, the out-of-pocket maximum protects you from unlimited medical expenses for that year.
Understanding the out-of-pocket maximum
An out-of-pocket maximum acts as a financial safety net, capping your total healthcare spending for a calendar year. Health insurance plans require you to share costs through deductibles, copayments, and coinsurance until you reach this limit. This cap is essential for budgeting and protecting against catastrophic healthcare costs.
The out-of-pocket maximum does not include your monthly premiums, nor does it cover out-of-network medical services not covered by your plan.
Components that count toward the out-of-pocket maximum
Several cost-sharing elements accumulate toward your out-of-pocket maximum.
| Cost Type | Definition | Counts? |
|---|---|---|
| Deductible | Amount you pay before insurance coverage begins | Yes |
| Copayments | Fixed fee for a specific service (e.g., $20 doctor visit) | Yes |
| Coinsurance | Percentage of costs you pay (e.g., 20%) | Yes |
| Monthly premiums | Regular payments for coverage | No |
| Out-of-network costs | Services from providers not in your plan’s network | Usually no |
| Non-covered services | Treatments or services your plan doesn’t cover | No |
Deductible
Your deductible is the first amount you must pay out of your own pocket before insurance kicks in. Deductibles range from $0 to several thousand dollars, depending on your plan.
Copayments
A copayment is a fixed fee you pay for a covered service, such as a doctor visit or prescription. These per-visit costs accumulate toward your out-of-pocket maximum.
Coinsurance
Coinsurance is your percentage share of a medical service’s cost after you’ve met your deductible. For example, if your plan covers 80% of surgery costs, you pay 20% coinsurance.
How the out-of-pocket maximum works
Your out-of-pocket maximum limit resets every plan year, typically January 1. All qualifying costs count toward this annual limit.
Good to know: Premiums, balance-billed amounts, and out-of-network costs typically do NOT count toward your out-of-pocket maximum—only in-network covered services do. Always verify what counts with your specific plan.
Out-of-pocket maximum by plan type
According to the U.S. Department of Health and Human Services (HHS), out-of-pocket maximums vary by insurance plan type.
ACA-compliant health plans sold on the marketplace have HHS-set annual limits. For 2026, the HHS-mandated maximum for individual coverage is typically in the range of $9,000–$10,000, while family coverage approaches $18,000–$20,000. These limits increase annually.
Employer-sponsored plans, Medicare plans, and short-term health plans may have different out-of-pocket maximums. Plans not required to comply with ACA rules may have higher or unlimited out-of-pocket maximums.
| Plan Type | Typical Maximum | Notes |
|---|---|---|
| ACA marketplace plans | $9,000–$10,000 (individual) | HHS-regulated; increases annually |
| Employer-sponsored | Varies widely | Employer can set any amount |
| Medicare Advantage | $6,700–$7,000+ | Varies by plan; includes Part B costs |
| High-deductible health plans | $7,700–$8,000+ | Paired with Health Savings Accounts |
Out-of-pocket maximum vs. deductible
These terms are often confused. Your deductible is part of your out-of-pocket maximum, not separate from it. Once you’ve paid your deductible, you typically share costs through copays and coinsurance until reaching your out-of-pocket maximum.
Example: Your plan has a $1,500 deductible and a $7,000 out-of-pocket maximum. You pay the full $1,500 deductible first. Then, any copays and coinsurance accumulate toward the remaining $5,500 needed to reach your $7,000 maximum.
What’s not covered by out-of-pocket maximums
The out-of-pocket maximum protects you for in-network covered services only. Several costs fall outside this protection:
- Monthly insurance premiums
- Out-of-network medical services
- Services not covered by your plan
- Balance billing (charges above the plan’s approved amount)
- Non-essential or cosmetic procedures
How to reach your out-of-pocket maximum strategically
- Find your plan’s maximum: Check your insurance plan documents or call your insurer to confirm your annual out-of-pocket maximum amount.
- Track your spending: Keep records of all deductibles, copayments, and coinsurance payments you make throughout the year.
- Calculate remaining balance: Sum all qualifying costs and subtract from your maximum to see how much more you need to spend.
- Plan major care strategically: If nearing your maximum, schedule elective procedures, dental work, or preventive visits before year-end to maximize 100% coverage.
- Verify coverage after hitting maximum: Once you reach your limit, confirm all subsequent in-network covered services are billed at 100% with no cost-sharing.
- Prepare for plan year reset: Document any unused progress before December 31, as your maximum resets on January 1.
Understanding your insurance coverage is essential for managing healthcare costs. Planning for medical expenses is critical, especially when coupled with other financial obligations like long-term disability insurance or emergency savings. Comparing available insurance plans helps you select coverage that fits your budget and healthcare needs.
Related reading on health insurance
- Deductible — the amount you must pay for healthcare services before your insurance begins to share costs.
- High-yield savings account — a savings option for money set aside for unexpected medical expenses.
- Long-term disability insurance — coverage that replaces income if you become unable to work due to illness or injury.
- Gap insurance — supplemental coverage that fills gaps in primary insurance.
Frequently asked questions
Does my insurance premium count toward my out-of-pocket maximum?
No. Your monthly insurance premiums are separate from your out-of-pocket maximum. Only deductibles, copayments, and coinsurance for covered services count. Premiums do not decrease your maximum, so budgeting must account for both premiums and potential out-of-pocket costs.
What happens if I use out-of-network providers?
Out-of-network costs typically do not count toward your out-of-pocket maximum and may not be covered at all under your plan. Your plan will likely require you to pay the full bill and seek reimbursement, often at a lower rate. This is why using in-network providers helps you reach your maximum faster and get more coverage.
Does my out-of-pocket maximum reset each year?
Yes. Your out-of-pocket maximum resets on January 1 each year if your plan year follows the calendar. If your plan year runs on a different schedule, it resets on your plan year start date. Any unused progress toward your maximum does not carry over to the next year.
Can I track my out-of-pocket maximum spending?
Yes. Your insurer typically provides online access to your account showing year-to-date spending toward your out-of-pocket maximum. You can also call your insurance company or check your Explanation of Benefits (EOB) statements, which show how much you’ve paid toward your maximum.
Is my family out-of-pocket maximum different from my individual maximum?
Yes. Family plans have both individual and family out-of-pocket maximums. Once any one family member hits their individual maximum, the insurer covers 100% of that person’s in-network costs for the year. The family maximum applies once the total out-of-pocket spending across all family members reaches the limit.
Pro Tip
If you’re approaching your out-of-pocket maximum late in the year, schedule deferred medical care (preventive visits, elective procedures, dental work) before December 31 if possible. Once you’ve hit your limit, remaining covered services cost you nothing for the remainder of that plan year.
Knowing your out-of-pocket maximum—and tracking your progress toward it—puts you in control of your healthcare spending throughout the year.
Key takeaways
- An out-of-pocket maximum is the most you’ll pay for covered healthcare in a plan year; your insurer covers 100% thereafter.
- Your deductible, copayments, and coinsurance all count toward this annual limit.
- Once you reach your out-of-pocket maximum, all subsequent in-network covered services are paid fully by your insurance.
- Out-of-pocket maximums vary significantly by plan type, ranging from $6,700 to $10,000+ for individual coverage.
Comparing insurance plans with different out-of-pocket maximums helps you find coverage that fits your healthcare needs and budget. Explore insurance options on SuperMoney to find the right plan.
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