Employee Benefits

What Is an Out-of-Pocket Maximum?

2 min read
Sep 06, 2023

It's likely you've heard the term "out-of-pocket maximum," which refers to the maximum amount of money the insured pays each year toward covered medical expenses. It's important to note, however, that not every direct payment you make for healthcare costs counts toward the max.

Payments such as copays, coinsurance, and deductibles for both healthcare services and prescriptions typically contribute to hitting that limit. Premiums and out-of-network expenses don't generally count toward out-of-pocket maximums.

Out-of-pocket maximums vs. deductibles 

Deductibles and out-of-pocket maximums are both caps on your spending that, once reached, trigger your insurance plan to help with costs. However, there are a few key differences. Once you hit your deductible, your plan starts to cover more, but you’ll likely still have to cover some costs, like copays, or coinsurance. But once you hit your out-of-pocket maximum, your insurance company covers 100% of expenses associated with covered services. 

What happens when you reach your out-of-pocket maximum? 

Once you reach your out-of-pocket maximum, your insurance company pays 100% of all covered healthcare services and prescriptions for the rest of the policy year.  

Here’s an example of how that might work: 

Say you have a $6,000 out-of-pocket maximum, a $2,500 deductible, and 20% coinsurance. Then, you have a year where you need lots of expensive medical care — surgeries, diagnostic tests, specialist appointments, and prescriptions — so you hit your deductible quickly.   After you’ve met your deductible amounts (remember, your deductible counts toward your out-of-pocket maximum), your insurance kicks in to cover costs from in-network providers. However, you still have $3,500 to go before you hit your maximum, how do you get there?  You continue to pay 20% coinsurance on covered services until you pay the remaining $3,500 in a single year. Once you’ve hit that $6,000 maximum between medical bills and prescriptions, then your insurance provider covers 100% of your in-network medical costs for the rest of the year.  

How much can you expect to pay for an out-of-pocket maximum? 

Out-of-pocket maximums for individual and group health insurance plans must adhere to a general out-of-pocket maximum limit set by the Affordable Care Act (ACA). So, while your out-of-pocket maximum will vary by plan, it will typically never exceed that general limit.



General limit for individual ACA-qualifying plans

General limit for family ACA-qualifying plans







On average, group health insurance plans had out-of-pocket maximums of around $4,355 annually in 2022.2 

Consider out-of-pocket costs during open enrollment 

If possible, assess your out-of-pocket maximum needs during open enrollment, and pick a plan with a maximum that’s a good match for you. 

Don’t forget about in-network vs. out-of-network costs 

Some insurance policies have both in-network and out-of-network maximums, with higher out-of-network maximums. Other insurance plans have no caps on out-of-network maximums, meaning you could be responsible for “unlimited charges” if you choose to seek medical care out of network.3

Chat with your human resources (HR) representative to learn more about your out-of-pocket cost options and available supplemental insurance plans, so you can decide what’s best for you.  

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1 “Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing…” Centers for Medicare and Medicaid Services, 2022
2 “2022 Employer Health Benefits Survey,” KFF, 2022 
3 “What You Need to Know Before Getting Out-Of-Network Care,” Verywell Health, 2022
4 “Cost-Sharing for Plans Offered in the Federal Marketplace,” KFF, 2023 

This article is intended to provide general information about insurance. It does not describe any MetLife product or feature.