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What is an Out-of-Pocket Maximum (OOP)?

How OOPs limit your total annual healthcare costs

Written by: Andrew Hall.

Key Takeaways

  • An Out-of-Pocket Maximum, or OOP, is the most required to pay for covered medical services within 12 months of your plan’s annual start date.

  • During a benefit year, insurance typically pays 100% of your covered benefits after you reach OOP.

  • Most plans count the deductibleA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself., coinsuranceCoinsurance is the percentage of your medical costs that you pay after you meet your deductible. The remaining amount is paid by your insurance company. For example: If you have a $1,000 medical bill and your coinsurance is 20%, you'll pay $200. Your insurance company will cover the final $800. and copaymentsA copayment (copay) is the fixed amount you pay directly to your provider for medical services or prescription drugs covered in your plan. For example: If your plan includes a copayment of $20 for office visits, you'll pay $20 to your doctor whenever you have an appointment. toward the OOP.

  • Uncovered medical procedures and your monthly premium payments DO NOT count toward your OOP.

What Is It?

An out-of-pocket maximum (OOP) is the most you’ll pay for medical services within your policy’s calendar year. Almost all insurance carriers require services to be in-network and covered by your plan to count toward your OOP.

The goal of an OOP is to protect patients from high healthcare costs. For example, an 80/20 policy requires insurance to cover 80% of costs, leaving you with 20% of costs. But if you need a major procedure that costs $100,000–and insurance pays 80% (or $80,000)–you would be responsible for the remaining $20,000, which is still too expensive for most customers. Instead, your plan’s OOP will prevent your liability from exceeding a predetermined amount.

How Much Is My Out-Of-Pocket Maximum?

Each plan is different, but your OOP can’t exceed the United States Department of Health and Human Services’ maximum limit. [1] The limits are:

U.S. Department of Health and Human Services maximum limits

Individual OOPFamily OOP
$7,900 (2019) $ 15,800 (2019)
$ 8, 150 (2020) $ 16,300 (2020)

What Counts Toward Your OOP?

The following medical-related charges count toward your OOP:

  • Deductible: is the max you’re required to pay out of pocket before your health insurance provider starts paying for covered services.
  • Coinsurance: is the amount you are responsible for after you meet your deductible. Many plans require customers to pay 20% of covered services at this point.
  • Copayments: is the fixed amount you pay to the doctor for covered services.

Examples of medical costs that are NOT subject to OOP:

  • Monthly premium: is the monthly cost of your insurance plan. You will likely continue to pay this, even after your OOP has been met.
  • Out-of-network visits: include visits to a doctor or specialist that is not covered by your policy.
  • Procedures not covered by your policy: includes any work that falls outside of your insurance policy.
  • Overpriced service: All services have a suggested cost. Procedures that exceed that amount will not count toward your OOP.

Who's Eligible?

Out-of-pocket maximums apply to policies that meet the Affordable Care Act’s requirements. Private PPO and HMO plans and Medicare Advantage policies often include an OOP.

Original Medicare (Parts A and B) does not include OOP; Medicare Supplement Insurance (Medigap) is often used to help limit patient costs.

FAQs

Do OOP maximums vary by insurance provider?

Yes. Be sure to consult with your benefits specialist or a licensed insurance agent to find a plan that best meets your needs and budget.

What's Next?