Health insurance is complicated, with a variety of confusing terms that can be difficult to understand. But knowing and understanding the details of your health insurance plan can go a long way, especially when it comes to saving money. One of these important details is your out-of-pocket maximum.
The out-of-pocket maximum for your health insurance plan is the annual limit that you, as a client, will have to pay for covered medical services. Your maximum out-of-pocket amount is determined by a variety of factors, including the cost of the plan and how many people in your family are covered by your plan.
The concept of an out-of-pocket maximum can seem confusingly similar to other terms insurance companies throw at you, like coinsurance, copay, premium, and deductible. But the differences between them are important and can affect both your health coverage and your wallet.
This guide has everything you need to know about the ins and outs of your out-of-pocket maximum.
What counts toward the out-of-pocket maximum?
Once you spend enough on medical services to reach your annual out-of-pocket maximum, your health insurance company will step in to cover all covered costs for the rest of the year. But what medical costs count toward your out-of-pocket limit? In most plans, the out-of-pocket maximum includes money spent on other components of your health care plan, such as:
- Deductibles
- Coinsurance
- copays
The big cost that doesn’t count toward your total out-of-pocket costs is your monthly premium. This means that no matter how much your premium is, to keep your health insurance active, you’ll need to keep paying for it monthly, even after you reach your out-of-pocket maximum.
The other category that doesn’t count toward your out-of-pocket maximum is health care services that aren’t covered by your insurance plan, like certain out-of-network providers and some non-covered treatments or drugs. Out-of-pocket costs for prescription drugs you pay for using SingleCare Coupons also don’t count toward your out-of-pocket maximum, although your insurance provider may be able to reimburse you at the end of your plan year.
Deductible versus out-of-pocket maximum
If you think out-of-pocket maximums sound similar to deductibles, think again. But they are slightly different, and this difference is important for understanding where your health care expenses come from.
We’ve already established that an out-of-pocket maximum is where your insurance policy limits most of your annual health care spending. After you reach this fixed amount, your insurer will step in and be responsible for other covered costs for the rest of the plan year.
Your deductible, on the other hand, is the amount of your health care services that you must pay. in full before your plan’s cost-sharing measures, such as coinsurance, take effect. In other words, once you meet your deductible, your insurer will start helping you pay for services, but you’ll likely still have to pay some of the costs through coinsurance or copays. That is until he reaches his out-of-pocket maximum. Then he will only be responsible for paying his monthly premium, for services that are not covered, or for certain out-of-network benefits.
What happens after an out-of-pocket maximum is reached?
Now that you know what it is, how does the out-of-pocket maximum work? Out-of-pocket maximums protect you from having to pay for expensive or unexpected medical care (like a trip to the emergency room) by capping the amount you’re expected to pay in a year. When your health care expense for a plan year crosses the dollar amount designated for your out-of-pocket maximum, your health plan pays all additional health care costs, as long as those costs are services your plan covers.
Once you meet your maximum out-of-pocket limit, you will no longer have to pay copays or coinsurance for in-network care. Examples of covered care may include a visit to your in-network primary care physician or the costs of a covered prescription. But you’ll still have to pay for out-of-network health services that aren’t normally covered by your plan.
Some insurance plans offer limited coverage for out-of-network health care expenses and may even limit the amount you must pay for out-of-network care each year. Generally, this limit will be separate from and higher than your in-network out-of-pocket limit. But many other plans don’t have an out-of-pocket maximum for out-of-network services, which means your insurer won’t step in to help pay for out-of-network services, no matter how expensive the medical bills are. Pay close attention to your plan’s out-of-network coverage options and try to stay in-network when possible to take advantage of your plan’s out-of-pocket maximum.
Out-of-pocket maximums for State Health Insurance vary quite a bit. For traditional fee-for-service Medicare (Original Medicare), there is no limit to the amount of money you pay toward medical expenses each year. If you have Original Medicare, you may be able to lower your out-of-pocket costs substantially by purchasing a Medigap plan or by enrolling in a low-income public benefit such as the Medicare Savings Program or Extra Help for Medicare Part D. But Medicare Advantage plans, which are offered through private insurers and are approved by Medicare, must follow the same guidelines as other ACA-compliant plans and may have a lower out-of-pocket maximum than ACA plans.
Find savings for health care
Although your health insurance plan may not cover all medical costs, there are other ways to save. SingleCare helps eliminate the confusion around cost accumulation by offering discounted prescription prices. And while many medications don’t count toward your out-of-pocket maximum or deductible, SingleCare coupons can make the medications you need more affordable.
