Out-of-Pocket Maximum: What It Is & How It Works

Defining “Out-Of-Pocket Maximum”

An Out-of-Pocket maximum is the maximum dollar amount you, the policyholder, has to pay “out of pocket” for your share of covered claims payment.  We describe it as the “catastrophic” protection built into the plans.

What That Means for You

If the out-of-pocket amount is reached, then your health plan will pay 100% of all claims until the end of the plan year.

What Out-of-Pocket Maximum Does and Does Not Include

Most often, the deductible, copays, and coinsurance (percentage share of your claims) for medical and prescription claims all go towards your out-of-pocket maximum. The out-of-pocket does not include your monthly premiums or dental and vision expenses covered by separate policies. If you have a plan with out-of-network coverage, the out-of-pocket amounts are generally tracked separately.  Additionally, when visiting providers that do not accept any insurance, the difference between what the provider charged and the plan allowance (known as the balance bill) is not included in your maximum out-of-pocket.

What is the difference between Aggregate vs. Separate Out-of-Pocket Maximum? 

An aggregate maximum means you and your family members must meet the family out-of-pocket maximum as a whole before the insurance carrier will pay 100% of the allowed amount of covered expenses. If your out-of-pocket maximum is separate, no one in the family can contribute more than the individual maximum. If a family member meets the individual out-of-pocket amount, their claims will be paid in full until the end of the plan year. The rest of the family members will still continue to pay their share of claims until the family’s out-of-pocket is reached.

What year is your Out-of-Pocket tracked on?

The out-of-pocket is tracked either on your plan year or the calendar year. It runs parallel to your deductible year. Most group policies run on the plan year, while individual policies run on the calendar year.  Check your plan documents to be sure.

What Else to Know About Your Out-of-Pocket Maximum

At the beginning of each plan year, your out-of-pocket maximum resets and starts at zero.  There is no carryover from year to year. It is important to keep an eye on how the insurance company is processing your claims.  Over the years, there have been many times that our clients felt their out-of-pocket maximum had been met, but the insurance company’s records disagreed.  In this case, request an audit by your carrier for confirmation.  Claims can always be reprocessed if they were processed incorrectly.

Questions about out-of-pocket maximums, or general benefits inquiries? Contact us at info@corporatecoverage.com.