The out-of-pocket maximum is the number that decides what happens to you in a bad medical year. People shop for plans by premium and forget this number, which is a mistake.
Here is what it actually is and how to use it when picking a plan.
What the out-of-pocket maximum is
The out-of-pocket maximum (sometimes called the out-of-pocket limit) is the most you can be charged for in-network covered care in a calendar year, not counting your monthly premium.
Once you reach it, the plan pays 100 percent of covered in-network services for the rest of the year.
What counts toward it:
- Your deductible
- Copays on covered services
- Coinsurance on covered services
What does not count:
- Your monthly premium
- Services not covered by the plan (anything excluded)
- Out-of-network care, on most plans, except in narrow cases
- Charges above the plan allowed amount for a service
The federal cap
The federal government sets the highest allowed out-of-pocket maximum for marketplace plans each year. Most plans set their maximum at or below that ceiling. Silver plans with cost-sharing reductions have substantially lower maximums.
Because the federal cap moves every year, do not memorize a dollar figure. Look up the current cap on HealthCare.gov when you shop.
Why this number matters more than most people realize
When you compare two plans by premium, the cheaper plan often has a higher deductible and a higher out-of-pocket maximum. In a quiet year, the cheap plan wins. In a year with one serious medical event, the cheap plan often loses badly.
A simple comparison. Two plans for a single person.
| Number | Plan A (Bronze) | Plan B (Silver with cost-sharing reduction) |
|---|---|---|
| Monthly premium after subsidy | $80 | $95 |
| Deductible | $7,000 | $1,200 |
| Out-of-pocket maximum | $9,200 | $3,500 |
Plan A is cheaper by $15 a month, which is $180 a year. If you have a year with no medical events, you save that $180.
If you have one bad year (an ER visit and follow-up surgery), you hit the out-of-pocket maximum on either plan. On Plan A you pay $9,200. On Plan B you pay $3,500. The premium savings of $180 a year cannot make up the $5,700 difference in worst-case exposure.
For someone who qualifies for a cost-sharing-reduction Silver plan, picking Bronze for the lower premium is usually leaving money on the table. See our premium tax credit income guide for how cost-sharing reductions work.
Individual versus family maximum
If you have family coverage, two limits apply at once.
Each covered person has an individual out-of-pocket maximum that cannot exceed the federal individual cap. Once someone hits their individual cap, the plan pays 100 percent for that person for the rest of the year, even if the family cap has not been hit.
The family has a combined out-of-pocket maximum, usually about double the individual one. Once the family hits the combined cap, the plan pays 100 percent for everyone for the rest of the year.
So if one family member has a major event and the others are healthy, that one person stops accumulating expense when they hit the individual cap. They are not held back by the family cap.
Common things that surprise people
The premium does not count. Some people assume hitting the max means everything is free. The monthly premium keeps coming.
Out-of-network does not count. If you go out of network on a PPO, those expenses usually go toward a separate out-of-network maximum that is much higher. On HMO and EPO plans they usually do not count at all, and the plan may not pay.
Services not covered do not count. If you get a service the plan does not cover (cosmetic procedure, certain alternative treatments), what you pay is not credited.
Balance billing can exceed the maximum. The federal No Surprises Act protects you in many ER and out-of-network-at-in-network-facility situations, but there are still gaps. If you get balance billed for a covered service, fight it before paying.
The plan year matters. Most plans reset on January 1, but employer plans can use other plan years. A summer plan-year reset can change your year-end math.
How to use this number when picking a plan
When comparing two plans, calculate two scenarios.
Quiet year: post-subsidy annual premium plus a few hundred dollars of expected use.
Bad year: post-subsidy annual premium plus the full out-of-pocket maximum.
The right plan is usually the one with the most tolerable bad-year total, not the one with the cheapest premium.
If you qualify for cost-sharing reductions, the Silver-CSR plan almost always has the lowest out-of-pocket maximum among the choices the marketplace shows you.
If you are healthy and want to gamble for the premium savings, an HSA-eligible high-deductible plan can work because the tax-advantaged account gives you somewhere to build a buffer. See our HSA-compatible plans guide.
What to do next
For any plan you are seriously considering, write down the individual and family out-of-pocket maximum from the Summary of Benefits and Coverage.
Compare those numbers across your finalists before you compare premiums.
If you have a chronic condition or a planned procedure, treat the out-of-pocket maximum as the most important number on the plan, not the premium.
For broader context, see how to compare health insurance plans and deductible, copay, coinsurance.
Sources
Frequently asked questions
Does the premium count toward the out-of-pocket maximum?
No. The premium is what you pay to keep the plan active. Only what you pay for covered services (deductible, copays, coinsurance) counts toward the out-of-pocket maximum.
Does out-of-network spending count?
Usually not toward the in-network out-of-pocket maximum. PPO plans often have a separate, higher out-of-network maximum. HMO and EPO plans generally do not cover out-of-network care at all except emergencies.
What is the federal cap on the out-of-pocket maximum?
The federal government sets a ceiling each year for marketplace plans. The number changes annually. Most plans set their maximum at or below the federal ceiling. Confirm the current cap on HealthCare.gov.
Does the family out-of-pocket maximum apply per person or per family?
Both. Each covered person has an individual cap (which cannot exceed the federal individual ceiling), and the family has a combined cap. Once any individual reaches their individual cap, the plan pays for them in full for the rest of the year.
