How an Out-of-Pocket Maximum Works

An out-of-pocket maximum (OOP max) is the most you will pay for covered services during a plan year. Think of it as a cap that protects you from high medical bills if you have a serious illness or injury that calls for surgery or a hospital stay, for example. You may also hear it called an out-of-pocket limit or max out of pocket. Knowing how it works can help you plan ahead and make better decisions about your care.

How does an out-of-pocket maximum work?

An out-of-pocket maximum works with other costs like your deductible, copays, and your share of the costs — and resets every plan year.

Most private health insurance plans have an out-of-pocket maximum. Health plans set their own limits each year, but as noted by healthcare.gov, they cannot go above a maximum amount set by the federal government.

Original Medicare does not include an out-of-pocket maximum. That is one reason why many Medicare members choose to add other coverage.

What medical expenses count toward my out-of-pocket maximum?

Each plan year, the money you pay for covered services in your health plan’s network counts toward your out-of-pocket maximum.* This includes costs for your copay, deductible, coinsurance, and covered prescription drug cost sharing.

Costs that go toward your out-of-pocket max include:

Copay — a fixed amount you pay for care, usually at the time of your visit
Deductible — the amount you pay before your plan starts to share costs
Coinsurance — your share of the costs for covered services
Prescription medicines covered by your plan and filled at a pharmacy in your plan’s network.

What medical expenses don’t count toward my out-of-pocket maximum?

Only covered services in your plan’s network count toward your in-network out-of-pocket maximum. If you get care outside of your plan’s network or choose services your plan does not cover, you may have to pay those costs even after you reach your out-of-pocket maximum.*

Costs that do not go toward your out-of-pocket maximum typically include:

Your monthly payment (premium)
Care from providers not in your plan’s network*
Services your plan does not cover
Charges from the care provider above the amount allowed by your plan. You can find this amount on your explanation of benefits.

If you have a health savings account (HSA), health reimbursement account (HRA), or flexible spending account (FSA), you can use those funds to help pay for copays, your deductible, and your share of the costs.

Counts toward your OOP max	Does not count toward your OOP max
Copays	Monthly premium
Deductible	Out-of-network care*
Coinsurance	Noncovered services
Covered prescriptions filled at an in-network pharmacy	Charges above the allowed amount

Counts toward your OOP max
Copays
Deductible
Coinsurance
Covered prescriptions filled at an in-network pharmacy

Does not count toward your OOP max
Monthly premium
Out-of-network care*
Noncovered services
Charges above the allowed amount

What is an out-of-pocket maximum vs. a deductible?

While your in-network out-of-pocket maximum is generally the total limit on what you pay each plan year for covered services in your plan’s network, your deductible is the amount you pay for covered healthcare services before your plan starts sharing costs. Until you reach that amount, you usually pay 100% for covered services, although most plans cover preventive care before you meet your deductible.

With most plans, your deductible counts toward your yearly out-of-pocket maximum. Once you meet your deductible, you'll continue to pay copays and coinsurance until you reach your out-of-pocket maximum.

What happens when I reach my out-of-pocket maximum?

Once you meet your out-of-pocket maximum for in-network care, your health plan will pay 100% of the allowed amount for covered services in your plan’s network for the rest of the plan year. This means you no longer have to pay your copays, deductible, or coinsurance.

Before reaching your OOP max	After reaching your OOP max
You may pay your copays, deductible, and coinsurance	You pay $0 for covered in-network services for the rest of the plan year
What you pay for covered in-network services counts toward your max*	Your plan pays 100% of the allowed amount for covered services

Before reaching your OOP max
You may pay your copays, deductible, and coinsurance
What you pay for covered in-network services counts toward your max*

After reaching your OOP max
You pay $0 for covered in-network services for the rest of the plan year
Your plan pays 100% of the allowed amount for covered services

It’s important to note that if you receive care or services outside your plan’s network, you may still have to pay additional charges from the care provider, which is usually the difference between the amount they charge and the amount your health plan pays.

Example of how an out-of-pocket maximum works for care in your plan's network

In this example, let’s say your:

Total cost of care = $20,000
Deductible = $1,300
Share of the costs (after the deductible) = 20% until you reach the max
Out-of-pocket maximum = $4,400

Here’s what you’d pay in this example:

$1,300 deductible
20% of the remaining share of the costs ($3,740)
That would bring your total to $5,040. However, because your out-of-pocket maximum is $4,400, you would only need to pay that amount. Your plan will pay the rest of the allowed amount for covered services in your plan’s network for the rest of the plan year.

Does the out-of-pocket maximum reset each year?

Yes, your out-of-pocket maximum resets at the start of each plan year. When your plan renews each year, the amount you’ve paid toward your max out of pocket goes back to $0. You’ll begin working toward your deductible and out-of-pocket maximum again for the new plan year.

How does a family out-of-pocket maximum work?

If you have a family plan and get care in your plan’s network, your out-of-pocket maximum may work in one of two ways: an embedded limit with separate limits, or an aggregate limit for the entire family.

Embedded limit: Each family member has their own limit. If one person reaches that limit, the plan then pays 100% of that person's covered care, even if the full family limit has not been met.
Aggregate limit: The entire family shares one total limit. One person or several people can contribute to reaching that amount. Once the family limit is reached, the plan then pays 100% of covered care for everyone on the plan.

How do I track my out-of-pocket costs?

To check where you are in meeting your out-of-pocket maximum, Anthem members can use our Sydney® Health app or website.

With this tool, you can:

Check your benefits and claims
Compare costs before you get care
Find doctors and hospitals in your plan’s network
Explore virtual care options

Your out-of-pocket maximum plays a key role in your financial protection. It can help you plan for healthcare costs and limit how much you spend on care during the year. By understanding the meaning of out-of-pocket maximum, you can make more informed choices about your care and get more value from your plan.

* Some plans may have a combined or separate out-of-pocket maximum for out-of-network care and you may be responsible for out-of-network costs in excess of your out-of-pocket maximum.

In certain situations, such as out-of-network emergency services, out-of-network cost sharing may count toward the yearly in-network out-of-pocket maximum. Please check your plan details for specifics.

What is an out-of-pocket maximum?