What Does Out-of-Pocket Maximum Mean With Insurance?

Out-of-pocket maximums are one of the factors of health insurance. Your out-of-pocket maximum is the greatest amount you are obligated to pay during the year.

Health Insurance Factors

• A number of factors play a part in your health insurance coverage. Before out-of-pocket maximums come into play, you must satisfy any deductible and coinsurance obligations.

Deductibles

• Your health insurance deductible is the amount for which you are fully responsible during the year. If your plan’s deductible is $1,000, then you must pay the first $1,000 of your health care before you become eligible for insurance benefits.

Coinsurance

• Most health care plans have coinsurance percentages. The coinsurance is the amount you share with the insurance company after the deductible is met. For example, if your coinsurance is 80/20 and you receive a health care bill for $100, the insurance company will pay $80 (assuming you’ve met your deductible), and you are responsible for paying the remaining $20.

Out of Pocket Maximums

• You must pay coinsurance amounts until your reach your out-of-pocket maximum. Once you reach it, the health insurance company will pay your covered health care costs in full for the balance of the year. If your out-of-pocket maximum is $2,500, you are not obligated to pay more than that amount.

Premiums

• Your monthly premiums never factor into your deductible or your out-of-pocket maximum. You can lower your premium rates by increasing your deductible, coinsurance and / or out-of-pocket maximum amounts.