What Is Included in an Out-of-Pocket Maximum?

Health insurance plans help manage healthcare costs and offer financial protection. A central feature in many policies is the “out-of-pocket maximum,” which limits a policyholder’s annual financial responsibility. This protective measure ensures individuals are not burdened with unlimited medical bills, capping personal spending for covered medical services each year.

Understanding the Out-of-Pocket Maximum

An out-of-pocket maximum, sometimes called an out-of-pocket limit, is the highest amount an individual or family must pay for covered healthcare services within a single policy year. Once this financial threshold is met, the health insurance plan typically pays 100% of the cost for all remaining covered medical services for that policy year. This limit resets at the start of each new policy year.

The fundamental purpose of this maximum is to protect policyholders from catastrophic medical expenses. Without such a cap, prolonged illness, serious injury, or extensive medical treatment could result in overwhelming financial debt. By setting a clear limit on annual spending, the out-of-pocket maximum provides predictability and financial security.

The federal government sets upper limits on out-of-pocket costs for plans sold through the Health Insurance Marketplace. For the 2025 plan year, this limit cannot exceed $9,200 for an individual and $18,400 for a family. These figures are subject to annual adjustments.

Contributions Towards the Maximum

Several types of costs contribute directly to reaching the out-of-pocket maximum, primarily from covered services received from in-network providers. These include deductibles, copayments, and coinsurance. Understanding how each of these components applies is important for managing healthcare expenses.

A deductible is the specific dollar amount an individual must pay for covered medical services before their health insurance plan begins to contribute to costs, aside from preventive care. For instance, if a plan has a $2,000 deductible, the policyholder is responsible for the first $2,000 of covered medical expenses. Any money paid towards this deductible counts towards the out-of-pocket maximum.

Copayments, often called copays, are fixed amounts paid for certain services, such as a doctor’s office visit or a prescription refill. For example, a plan might require a $30 copay for a primary care physician visit. These fixed payments also accumulate and count towards the overall out-of-pocket maximum.

Coinsurance represents a percentage of the cost of covered services that an individual is responsible for paying after their deductible has been met. If a plan has a 20% coinsurance, the policyholder pays 20% of the allowed cost for a service, and the insurance plan pays the remaining 80%. These coinsurance payments are included in the calculation toward the out-of-pocket maximum.

For plans eligible with a Health Savings Account (HSA), the out-of-pocket maximums are often lower than general health plans. For 2025, the maximum out-of-pocket for HSA-eligible plans is capped at $8,300 for self-only coverage and $16,600 for family coverage.

Items Not Counting Towards the Maximum

While the out-of-pocket maximum provides significant financial protection, certain expenses typically do not count towards this limit. Health insurance premiums, which are the regular monthly or annual payments made to maintain coverage, never contribute to the out-of-pocket maximum.

Costs incurred from out-of-network providers generally do not count towards an in-network out-of-pocket maximum. If a policyholder chooses to receive care outside this network, those expenses may not apply to the in-network maximum, or they might contribute to a separate, often higher, out-of-network maximum if the plan offers such coverage.

Services or treatments not covered by the health plan also do not count towards the maximum. This can include elective cosmetic surgery, experimental treatments, or services deemed not medically necessary by the insurer. Any expenses for these non-covered services fall entirely outside the scope of the out-of-pocket limit.

Additionally, if a health plan has specific limits on certain services, such as a cap on the number of physical therapy sessions, any costs incurred beyond those limits would not count. Amounts billed by a provider that exceed the insurer’s “allowed amount” for a service typically do not apply towards the maximum.

Balance billing, which occurs when an out-of-network provider bills a patient for the difference between their charge and what the insurance company paid, is another expense that usually does not count towards the in-network out-of-pocket maximum. Expenses for services like vision care or dental care are often part of separate ancillary plans and do not contribute to the medical out-of-pocket maximum unless they are explicitly integrated into the main medical plan.

Individual and Family Maximums

Health insurance plans covering multiple individuals, such as family plans, typically feature both individual and family out-of-pocket maximums. These two limits interact to provide comprehensive financial protection for all covered members.

Within a family plan, each covered individual usually has their own individual out-of-pocket maximum. Once a single family member’s accumulated out-of-pocket costs for covered services reach this individual limit, the plan begins paying 100% of their covered medical expenses for the remainder of the policy year. This ensures that no single person on the plan faces unlimited financial exposure.

In addition to individual limits, there is an overarching family out-of-pocket maximum for the entire household. All qualified out-of-pocket expenses paid by any family member, including deductibles, copayments, and coinsurance, contribute to this collective family maximum. Once the combined out-of-pocket costs for all family members reach this higher aggregate limit, the plan will then pay 100% for all covered services for every person on the plan for the rest of the year, regardless of whether each individual has met their specific individual maximum.

This interaction is often referred to as an “embedded” individual maximum within a family plan. It means that while the family maximum protects the entire group from excessive costs, the individual maximum provides an additional layer of protection for any single family member who might incur significant medical expenses early in the policy year.