What Is MOOP (Maximum Out-of-Pocket) in Insurance?

An out-of-pocket maximum, often called MOOP, is a feature of health insurance plans designed to protect individuals from excessive healthcare costs. It establishes a financial ceiling on the amount a policyholder will pay for covered medical services within a specific plan year. This limit ensures a cap on personal financial responsibility, providing a safety net against unforeseen expenses.

Once this limit is reached, the insurance plan assumes responsibility for 100% of the costs for all subsequent covered medical services for the remainder of that year. This mechanism shifts the financial burden from the individual to the insurer, offering predictability in healthcare spending.

Understanding the Out-of-Pocket Maximum

The out-of-pocket maximum defines the total amount an insured individual or family must pay for covered healthcare services during a plan year. This limit includes cost-sharing elements such as deductibles, copayments, and coinsurance for in-network, covered medical services. All these payments accumulate towards reaching the stated maximum.

However, not all healthcare-related expenses contribute to this limit. Monthly premiums, which are regular payments to maintain insurance coverage, do not count towards the out-of-pocket maximum. Similarly, costs for services not covered by the plan, or charges incurred from out-of-network providers (unless specifically allowed by the plan), do not apply. Expenses exceeding the allowed amount for a service charged by a provider also do not count.

How the Out-of-Pocket Maximum Works

The out-of-pocket maximum functions as an annual cap on healthcare spending for covered services. As individuals incur costs throughout their plan year, payments like deductibles, copayments, and coinsurance contribute to this limit. Once the sum of these eligible expenses reaches the predetermined maximum, the health insurance plan covers 100% of all further covered medical costs for the remainder of that plan year.

For example, consider a plan with a $4,000 out-of-pocket maximum. If a policyholder pays a $1,500 deductible, $500 in copayments, and $2,000 in coinsurance for covered services, their total out-of-pocket spending reaches $4,000. At this point, the out-of-pocket maximum has been met. For any additional covered medical services needed for the rest of that year, the insurance company will pay the full cost, alleviating further financial responsibility for the policyholder.

Variations in Out-of-Pocket Maximums

Out-of-pocket maximums can be structured differently depending on the health insurance plan, particularly concerning individual versus family coverage and in-network versus out-of-network care. Family health plans include both an individual out-of-pocket maximum for each member and an overall family out-of-pocket maximum. Once a single family member reaches their individual limit, their covered medical expenses are paid 100% by the insurer for the rest of the plan year, but costs for other family members still contribute towards the overall family limit. The family maximum must be met before the plan covers 100% of covered services for all members.

Plans often have different out-of-pocket maximums for in-network versus out-of-network care. Many plans feature a separate, higher out-of-pocket maximum for services received from providers outside the plan’s network. In some cases, there might not be an out-of-pocket maximum for out-of-network care at all, meaning an individual’s financial responsibility could be unlimited for such services. This distinction encourages policyholders to use in-network providers, where costs are often negotiated and more predictable.

Factors Influencing Your Out-of-Pocket Maximum

The amount of an out-of-pocket maximum varies based on the design and characteristics of the health insurance plan. Different plan types, such as Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), and Point of Service (POS) plans, can influence the out-of-pocket maximum. Plans with more flexible networks, like PPOs, might have different cost-sharing structures that affect the maximum compared to more restrictive HMOs.

Health plans offered on the Health Insurance Marketplace are categorized into “metal tiers”: Bronze, Silver, Gold, and Platinum. These tiers generally reflect the percentage of healthcare costs the plan is expected to cover, influencing the out-of-pocket maximum. Bronze plans have the lowest monthly premiums but the highest out-of-pocket maximums, while Platinum plans have higher premiums but the lowest maximums. Silver plans can also offer lower out-of-pocket maximums for eligible individuals through cost-sharing reductions.

Regulatory limits also play a role in setting out-of-pocket maximums. Federal guidelines establish the highest permissible out-of-pocket limits that health plans can impose annually. For instance, for the 2025 plan year, the maximum out-of-pocket limit for an individual Marketplace plan is $9,200, and for a family plan, it is $18,400.