What is the out of pocket maximum in medical billing?


Editorial team Published on

An out-of-pocket maximum (also called an out-of-pocket limit) is the most money you have to pay for covered health care services in a 12-month plan year. Once you reach this amount, your health insurance pays 100% of the allowed costs for covered, in-network services for the rest of the year.

What Counts Toward Your Out-of-Pocket Maximum?

  • Deductibles: The amount you pay for care before your insurance starts sharing costs.
  • Copayments (Copays): Fixed flat fees you pay for specific visits or prescriptions (e.g., $30 for a doctor's visit).
  • Coinsurance: Your share of the costs of a covered service, calculated as a percentage (e.g., paying 20% of a bill while insurance pays 80%).

Note: All deductible dollars you spend also count toward your out-of-pocket maximum.

What Does NOT Count?

  • Monthly premiums: The regular amount you pay to keep your health insurance plan active.
  • Out-of-network care: Services from providers who do not have a contract with your insurer (unless under specific emergency exceptions).
  • Non-covered services: Care or prescriptions that your health plan simply does not pay for.
  • Balance billing: Charges from an out-of-network provider for the difference between what they charge and what your insurance allows.

Federal Limits

Under the Affordable Care Act (ACA), annual out-of-pocket maximums for marketplace plans cannot exceed legal caps:

  • 2025: $9,200 for an individual / $18,400 for a family
  • 2026: $10,600 for an individual / $21,200 for a family
  • 2027: $12,000 for an individual / $24,000 for a family

(Note: High-Deductible Health Plans [HDHPs] and Medicare Advantage plans have their own separate federal or plan-specific limits.)

How It Works in Practice

  1. At the start of the year: You pay 100% of your medical costs until you satisfy your deductible.
  2. After the deductible: You and your insurance share costs via copays and coinsurance.
  3. Reaching the maximum: Every dollar you spent toward your deductible, copays, and coinsurance accumulates. The moment your total out-of-pocket spending hits your plan's maximum, your insurance covers all remaining in-network covered costs at 100%.
  4. Reset: The counter resets to zero at the start of every new plan or calendar year (usually January 1).

You can review specific plan caps or track your current spending through your insurer's online portal or official resources like HealthCare.gov.