The out-of-pocket maximum is the most you will pay for covered services in a plan year. After you spend this amount, your plan should then pay 100% of the cost for covered benefits.
Costs you pay for coveredservices count toward your out-of-pocket maximum. This generally includes the amount you pay for deductibles, coinsurance, and copays.
The following is an example of how an out-of-pocket maximum works in a typical health plan:
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David's health plan has a $1,000 deductible, 30% coinsurance, and a $4,000 out-of-pocket maximum.
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David has a condition that requires frequent visits to his regular doctor and numerous specialists. He also has an expensive medical, which he refills once a month.
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In the first month of the plan year, David pays $1,000 in medical bills, therefore meeting his deductible. The $1,000 also counts towards meeting his out-of-pocket maximum.
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In the second month of the plan year, David has a round of expensive medical tests. The total medical cost is $5,000. David pays 30% coinsurance of this medical cost, or $1,500. His plan pays the remaining 70%, or $3,500. The $1,500 David pays also counts towards meeting his out-of-pocket maximum.
- So far, David has spent a total of $2,500 towards his out-of-pocket maximum.
- In the third month of the plan, David spends $1,500 in copays. David has now spent a total of $4,000 towards his out-of-pocket maximum. His health plan will now pay 100% of the cost for covered care for the rest of the plan year.