When Does Out-of-Pocket Maximum Reset?

An out-of-pocket maximum is the highest amount an individual or family will pay for covered healthcare services within a health insurance plan during a specific period. This limit helps protect consumers from unexpectedly high medical costs. Once this maximum is reached, the health insurance plan typically covers 100% of all additional covered healthcare expenses for the remainder of that period.

What Counts Towards Your Out-of-Pocket Maximum

Costs that generally contribute to the out-of-pocket maximum include deductibles, copayments, and coinsurance. Deductibles are the amount paid before the insurance begins to cover a portion of costs, while copayments are fixed amounts for specific services, and coinsurance is a percentage of costs shared between the member and the insurer. These expenses typically apply to covered, in-network medical services and prescription drugs. Hospital stays are also common expenses that count toward this maximum.

However, several types of costs do not count toward the out-of-pocket maximum. Monthly premiums, which are the regular payments to maintain insurance coverage, are excluded from this calculation. Expenses for services not covered by the health plan, such as cosmetic treatments or certain alternative medicines, also do not contribute to the limit. Costs incurred from out-of-network providers or charges exceeding the allowed amount for a service typically do not count. Most preventive care, such as annual check-ups, is often covered at no cost and therefore does not count towards the maximum.

Common Reset Timelines

The out-of-pocket maximum typically resets annually, aligning with either a calendar year or a plan year. A calendar year reset occurs on January 1st and concludes on December 31st. Many individual health insurance plans and some group plans use this calendar year framework for their financial limits.

Alternatively, a plan year operates on a 12-month cycle that can begin on any month, determined by the specific health insurance policy or employer group plan. For instance, a plan year might run from July 1st to June 30th of the following year. This means that an individual’s out-of-pocket maximum will reset on the anniversary of their plan’s effective date. To ascertain the precise reset date for a specific plan, individuals should consult their plan documents, review their insurance card, or directly contact their insurance provider.

Situations That Change the Reset

Several circumstances can alter the standard annual reset of an out-of-pocket maximum. If an individual changes health insurance plans mid-year, the out-of-pocket maximum typically restarts with the new policy. Any amounts paid towards the previous plan’s maximum generally do not carry over to the new plan, meaning a new deductible and out-of-pocket maximum period begins with the effective date of the new coverage.

Enrolling in a new health plan during a Special Enrollment Period (SEP) also initiates a new out-of-pocket maximum cycle. SEPs are opportunities to enroll in or change health coverage outside of the standard open enrollment period, triggered by qualifying life events such as marriage, the birth of a child, loss of other health coverage, or a change of residence. The out-of-pocket maximum for the new plan begins on the effective date of this newly acquired coverage.

For family health insurance plans, there is typically an overall family out-of-pocket maximum, and often individual out-of-pocket maximums for each covered family member. If a single family member reaches their individual out-of-pocket maximum, the plan will begin paying 100% of their covered care for the remainder of the plan year. All out-of-pocket expenses paid by individual family members contribute to the collective family out-of-pocket maximum. Once the family’s aggregate maximum is met, the plan will then cover 100% of covered services for all family members for the rest of the plan year.