Out-of-Pocket Maximum
Annual cap on total cost-sharing required of an insured under a health plan.
The out-of-pocket maximum (OOPM) is the annual ceiling on the total amount an insured person must pay out-of-pocket for covered health care services under their insurance plan. Once the OOPM is reached, the insurance company pays 100% of covered costs for the remainder of the plan year, regardless of additional utilization. This protects individuals and families from catastrophic healthcare costs.
Under the ACA, all non-grandfathered individual and small group health plans must have an out-of-pocket maximum at or below the federally mandated limit ($9,450 for individuals, $18,900 for families in 2024), adjusted annually for inflation.
Out-of-pocket expenses that count toward the OOPM include deductibles, copayments, and coinsurance for covered in-network services. What generally does not count: premiums, balance billing from out-of-network providers, non-covered services, and costs exceeding allowed amounts.
Family OOPM structures have two variations: embedded (each family member has an individual OOPM—once any one member hits their individual limit, the insurer pays 100% for that member's costs even if the family hasn't reached the aggregate limit) and non-embedded (the family OOPM must be reached collectively before any member gets 100% coverage).
For individuals with chronic conditions or who require frequent high-cost medical services, the OOPM is often the most important plan parameter—ensuring that regardless of medical costs, annual out-of-pocket exposure is capped. For healthy individuals rarely reaching their deductible, the OOPM is a theoretical backstop rarely reached in practice.
High-deductible plans sometimes have OOPMs equal to or near the deductible, meaning once the deductible is met, all covered costs are paid by the insurer—simplifying the cost structure.
FAQs
What is the difference between the out-of-pocket maximum and the deductible?
The deductible is the amount you must pay before the insurance company starts sharing costs—once met, you enter cost-sharing (copays, coinsurance). The out-of-pocket maximum is the total cap on all cost-sharing for the year—once reached, the insurer pays 100%. The deductible is always less than or equal to the OOPM; it's the first threshold, while the OOPM is the final ceiling. Between the deductible and OOPM, you pay coinsurance or copays. Example: $2,000 deductible, $6,500 OOPM, 20% coinsurance: pay full costs first $2,000, then 20% of costs until total out-of-pocket reaches $6,500, then insurer covers 100%.
Do out-of-network costs count toward the out-of-pocket maximum?
For most ACA-compliant plans, out-of-network costs do not count toward the in-network out-of-pocket maximum—the insurer maintains separate deductibles and OOPMs for in-network and out-of-network services. Costs from out-of-network providers (balance billing, non-covered portions) may not count at all. However, emergency services (required to be covered at in-network rates under the No Surprises Act) and services at in-network facilities where only out-of-network providers were available are subject to in-network cost-sharing rules—these costs count toward the in-network OOPM. HMOs and EPOs may provide no out-of-network coverage at all (except emergencies), making the distinction moot for most services.
Can a family member's costs count toward both individual and family out-of-pocket maximums?
Yes—in plans with embedded individual OOPMs, each family member's costs count simultaneously toward both their individual OOPM and the family aggregate OOPM. Once any individual reaches their embedded individual limit ($9,450 in 2024 for many plans), the insurer pays 100% for that individual's remaining covered costs—even if the family's aggregate OOPM hasn't been reached. The remaining family members continue accruing costs toward the family aggregate OOPM. This embedded structure particularly benefits families where one member has very high costs—that member reaches their individual OOPM early while other members continue cost-sharing under the family aggregate.
Related Terms
Deductible
Amount the insured must pay out-of-pocket per claim before insurance coverage begins.
Copayment
Fixed amount the insured pays for a covered health care service at the time of service.
Coinsurance
Percentage of costs the insured shares with the insurer after the deductible is met.
Premium
Regular payment made by a policyholder to maintain insurance coverage.
