What Is "out-of-Pocket Maximum"?


Quick Answer

"Out-of-pocket maximum" is an insurance term referring to the maximum expenditures an insured person can have in a year before the insurance company pays 100 percent of services. HealthCare.gov indicates the 2015 max for an individual Marketplace plan is $6,600 and $13,200 for a family. Out-of-pocket maximums vary significantly, but BlueCross/BlueShield notes that in 2014 they typically range from $1,000 for an individual policy to $11,000 maximum for a family.

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Full Answer

Common costs that go toward the annual out-of-pocket maximum include deductibles, copayments and coinsurances. If the out-of-pocket maximum is $2,000 for an individual plan, the covered person contributes $2,000 toward these payments on covered services. After that point, the insurance company pays 100 percent of all qualified charges, and the insured person has no more out-of-pocket costs for that calendar year. The out-of-pocket maximum resets to zero at the start of the next year.

A person's premium charges for the coverage don't contribute to the out-of-pocket maximum. If an employee pays $300 a month through his employer for group coverage, for instance, that $300 isn't part of the out-of-pocket maximum. Many workers benefit from pre-tax premiums, though, by having their employer take out the premium portion through a payroll deduction.

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