What Is an Out-of-Pocket Maximum?
Health ConditionsGeneral HealthHealth Insurance

What Is an Out-of-Pocket Maximum?

What Is an Out-of-Pocket Maximum?
Stocksy; Everyday Health
By
Published on June 25, 2025
Reviewed by
An out-of-pocket maximum is the most you will have to pay for health services over a year. After you reach your plan’s out-of-pocket maximum, your insurance company will cover 100 percent of your medical bills.


How Does an Out-of-Pocket Maximum Work?

When you sign up for health insurance, your company will provide information about your out-of-pocket maximum. This is a predetermined amount that you must reach in a year before all your medical care is fully covered.

It works like this: You pay for medical services throughout the year via:

  • Deductibles: The amount of money you have to spend before your insurance company splits the bill with you
  • Coinsurance: A percentage of the cost of bills that you share with your insurer after you reach your deductible
  • Copays: A fee that you pay when you receive a medical service
All of these costs add up and count toward your out-of-pocket maximum. Once you reach that amount, you stop paying. After that, your insurance company will cover any other covered medical expenses you have for the rest of the year, no matter how high they are. (If any expenses aren’t included in your health plan, such as acupuncture or in vitro fertilization, for example, they won’t count toward your out-of-pocket maximum.)

Example of an Out-of-Pocket Maximum

Let’s say your out-of-pocket maximum is $5,000, your deductible is $1,000, and your coinsurance is 20 percent. Here’s an example of how an out-of-pocket maximum might work for you.

  1. First, you pay your deductible, which is $1,000.
  2. Then, you pay 20 percent of every medical bill until you reach $5,000 total.
  3. Once you reach $5,000, your insurer will pay 100 percent of your covered services for the rest of the year.


Do All Expenses Go Toward the Out-of-Pocket Maximum?

Not all expenses will go toward your out-of-pocket maximum. Generally, the amount you pay for your copays, deductibles, and coinsurance will count.

 Different plans have different coverage options, though, so it’s important to check the details of your policy.
Here are some expenses that might not apply to your out-of-pocket maximum.

  • Monthly premiums: Payments that keep your insurance active
  • Out-of-network care: Payments when you go to a doctor or a hospital your insurance company doesn’t work with
  • Services that aren’t covered: For example, cosmetic surgery or alternative treatments
  • Preventive care: Services such as vaccines and yearly wellness visits are already covered by many health insurance plans under preventive care, so they don’t count toward your out-of-pocket maximum.
  • Additional costs: If a doctor or hospital charges more than the allowed amount for a service, it might not be applied to your maximum.

Do All Types of Plans Have an Out-of-Pocket Maximum?

Health insurance plans that meet the Affordable Care Act (ACA) standards must provide out-of-pocket maximums for their customers. This includes most major insurance policies. On the other hand, there are some exceptions, such as short-term health plans, health-sharing ministry programs, and other grandfathered, non-ACA compliant plans.

While health insurance companies can set their own maximums, the ACA mandates that most plans have limits on what they can charge. For example, the out-of-pocket maximum limit for 2025 is:

  • $9,200 for an individual
  • $18,400 for a family

Different types of plans also offer different out-of-pocket maximum options.

Individual Plan

With an individual plan, only one person is on the policy. When that individual reaches their out-of-pocket maximum, the insurer will start paying 100 percent of their covered medical costs for the rest of the year.

Family Plan

Family plans are an option if you have a spouse or children. Within a family plan, you may have two types of out-of-pocket maximums:

  • Individual Maximum Each person in the family has their own max to hit. Once they reach this amount, the insurer will pay all of that individual’s bills.
  • Family Maximum The entire family’s expenses count toward the max. If one person in the family reaches the out-of-pocket maximum, the entire family will be covered for the rest of the year.


HMO vs. PPO

With a health maintenance organization (HMO) plan, out-of-pocket maximums typically apply only to in-network care. That differs from a preferred provider organization (PPO) plan, which may provide out-of-network benefits, including a separate out-of-network, out-of-pocket maximum. Though PPOs offer more flexibility, the out-of-network max is typically much higher than the in-network limit.

The Takeaway

  • An out-of-pocket maximum is the maximum amount of money you will have to spend on covered medical expenses in a year.
  • Copayments, deductibles, and coinsurance typically count toward your max. Other costs, like your monthly premiums, do not.
  • Insurance companies can set different limits for out-of-pocket maximums, though there is a maximum limit set by law.

Resource We Trust

EDITORIAL SOURCES
Everyday Health follows strict sourcing guidelines to ensure the accuracy of its content, outlined in our editorial policy. We use only trustworthy sources, including peer-reviewed studies, board-certified medical experts, patients with lived experience, and information from top institutions.
Resources
  1. What Is an Out-of-Pocket Maximum? Healthinsurance.org.
  2. How to Pick a Health Insurance Plan. Healthcare.gov.
  3. Deductible vs. Out-of-Pocket Maximum: What’s the Difference? MetLife. September 6, 2023.
  4. Copay, Coinsurance, and Out-of-Pocket Maximum. United Healthcare.
  5. What Is an Out-of-Pocket Maximum and How Does It Work? Cigna Healthcare.
  6. Health Plans That Don’t Comply With the ACA Put Consumers at Risk. The Commonwealth Fund. November 14, 2019.
  7. Out-of-Pocket Maximum/Limit. Healthcare.gov.
  8. Health insurance plan & network types: HMOs, PPOs, and more. Healthcare.gov.
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Sarah Goodell, MA

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Sarah Goodell is a health policy consultant with over 25 years of experience. She is currently working as an independent consultant focusing on the Affordable Care Act, Medicare, health financing, and health delivery systems.

She previously served as director of the Synthesis Project, funded by the Robert Wood Johnson Foundation. At the Synthesis Project she managed projects on a variety of topics, including risk adjustment, Medicaid managed care, hospital consolidation, the primary care workforce, care management, and medical malpractice.

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Julie Marks is a freelance writer with more than 20 years of experience covering health, lifestyle, and science topics. In addition to writing for Everyday Health, her work has been featured in WebMD, SELF, Healthline, A&E, Psych Central, Verywell Health, and more. Her goal is to compose helpful articles that readers can easily understand and use to improve their well-being. She is passionate about healthy living and delivering important medical information through her writing.

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