Employee Benefits
What Is an Out-of-Pocket Maximum?
Your out-of-pocket maximum is the maximum amount of money you pay for covered services in a policy year.
Most individual and group health insurance plans have an out-of-pocket maximum associated with them, but they also must adhere to a general out-of-pocket maximum limit set by the Affordable Care Act. So, while your out-of-pocket maximum will vary by plan, it typically will never go over that general limit.
Year |
General limit for individual ACA-qualifying plans |
General limit for family ACA-qualifying plans |
2022 |
$8,700 |
$17,400 |
2023 |
$9,100 |
$18,200 |
What does out-of-pocket mean?
Out-of-pocket simply refers to the money you pay for covered services.
Not every direct payment counts as out-of-pocket or contributes to your maximum.
What counts towards your out-of-pocket maximum?
Only certain types of payments contribute to hitting your maximum, including copays, coinsurance, and deductibles. Payments you make for covered services will also go toward your yearly maximum. (What counts toward your out-of-pocket maximum can differ by plan, so make sure you understand your policy’s terms.)
Typically, monthly premiums, payments for out-of-network services, or payments for any services not covered by your plan don’t count toward your maximum.
Out-of-pocket maximum vs. deductibles
Deductibles and out-of-pocket maximums are both caps on your spend that, once reached, trigger your insurance to help with costs, but there are a few key differences. Once you hit your deductible, your plan starts to cover more, but you likely still have to cover some costs like copays or coinsurance.
Once you hit your out-of-pocket maximum, your expenses associated with covered services are covered at 100%.
What’s the average out-of-pocket maximum?
The Kaiser Family Foundation found that employees enrolled in group health insurance had out-of-pocket maximums that averaged around $4,300 annually in 2021.1
As for individual insurance plans purchased through the federal marketplace, their out-of-pocket maximums fall in an extremely wide range based on the “metal” level assigned to the plan (silver, bronze, etc.) and whether the policyholder qualifies for a cost-sharing reduction.2 The exact out-of-pocket maximum is detailed in the terms of the policy.
What happens when you reach your out-of-pocket maximum?
Once you reach your out-of-pocket maximum, your insurance will pay 100% of the cost for all covered services thereafter.
Reaching your out-of-pocket maximum can save you money if you have a lot of health care needs in a given year, but that may not always happen. The limit might be high enough that you won’t exceed it. That’s why it’s so important to assess and anticipate your needs during open enrollment — you’ll want to pick a plan with an out-of-pocket maximum that’s a good match for you.
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1 “Among Covered Workers With an Out-Of-Pocket Maximum for Single Coverage, Average Out-Of-Pocket Maximums, by Firm Size, 2021 9805,” KFF
2 “Cost-Sharing for Plans Offered in the Federal Marketplace, 2014-2022,” KFF
This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.