Out-of-Pocket Maximum vs. Deductible: What’s the Difference?
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A deductible and an out-of-pocket maximum both affect what you pay for health care, but they work differently.
Your deductible is the amount you pay for certain covered services before your health plan begins sharing those costs. Your out-of-pocket maximum is the most you’ll pay in eligible cost sharing for covered in-network services during a plan year.
Knowing the difference can help you compare health insurance plans and understand your potential costs.
Key Takeaways
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A deductible is the amount you pay for certain covered services before your health plan begins sharing those costs.
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An out-of-pocket maximum limits what you pay in eligible cost sharing for covered in-network services during a plan year.
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Eligible deductibles, copayments, and coinsurance generally count toward a Marketplace plan’s out-of-pocket maximum. Premiums don’t.
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Meeting your deductible doesn’t mean all covered care becomes free. You may continue paying copayments or coinsurance.
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After reaching your out-of-pocket maximum, your plan generally pays 100% of covered in-network benefits for the rest of the plan year.
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Deductible payments
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Copayments
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Coinsurance
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Lab work
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Imaging
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Hospital care
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Specialist services
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Prescription drugs
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Monthly premiums
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Services the plan doesn’t cover
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Certain out-of-network care
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Amounts above the plan’s allowed amount in situations where those charges are permitted
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A $2,000 deductible
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20% coinsurance after the deductible
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A $9,000 out-of-pocket maximum
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Individual and family deductibles
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Individual and family out-of-pocket maximums
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Copayments and coinsurance
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Prescription drug cost sharing
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Monthly premiums
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Deductible
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Out-of-pocket maximum
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Copayments and coinsurance
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Prescription drug coverage
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Provider network
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Health care services you expect to use
Deductible vs. Out-of-Pocket Maximum: The Main Difference
| Deductible | Out-of-Pocket Maximum | |
|---|---|---|
| What is it? | What you generally pay for certain covered services before your plan starts sharing costs | The limit on eligible cost sharing for covered in-network services during a plan year |
| What happens when you reach it? | Your plan generally begins sharing eligible costs | Your plan pays 100% of covered in-network benefits for the rest of the plan year |
| Do premiums count? | No | No |
| Can copays and coinsurance count? | Depends on the plan | Generally, yes, for covered in-network services |
| Do you keep paying after reaching it? | Usually, through copays or coinsurance | Generally, not for covered in-network benefits |
Check your Summary of Benefits and Coverage and other plan documents for details specific to your coverage.
What Is a Health Insurance Deductible?
A health insurance deductible is the amount you pay for certain covered services before your plan begins paying its share.
For example, with a $2,000 deductible, you may need to pay the plan’s negotiated cost for certain services until eligible spending reaches $2,000. After that, your plan may begin sharing costs through copayments or coinsurance.
Some services may be covered before you meet the deductible. Plans can also have separate deductibles for certain services or prescription drugs, while family coverage may include individual and family deductibles.
Understanding how premiums and deductibles work together can help you evaluate a plan’s potential total cost.
What Is an Out-of-Pocket Maximum?
An out-of-pocket maximum, or out-of-pocket limit, is the most you’ll pay in eligible cost sharing for covered in-network services during a plan year.
Eligible expenses can include:
Once you reach the limit, your plan pays 100% of covered in-network benefits for the rest of the plan year. You still pay your monthly premium, and some expenses, such as non-covered services and certain out-of-network costs, generally don’t count.
Coverage Fox’s health insurance glossary can help explain other common insurance terms.
What Counts Toward Your Deductible?
What counts depends on the plan. Costs for covered services subject to the deductible may include:
Not every covered service is necessarily subject to the deductible. Some plans cover certain services with a copayment before you meet it. Preventive services covered under applicable Affordable Care Act (ACA) requirements may also be available in-network without cost sharing.
Check your plan documents to see which services apply to your deductible.
What Counts Toward Your Out-of-Pocket Maximum?
For Marketplace plans, eligible deductibles, copayments, and coinsurance for covered in-network services generally count toward the out-of-pocket maximum.
Expenses that generally don’t count include:
Plan rules vary, so review your policy for details.
How a Deductible and Out-of-Pocket Maximum Work Together
Eligible amounts paid toward your deductible can also count toward your out-of-pocket maximum.
Consider a hypothetical plan with:
Step 1: Meet the Deductible
You receive $2,000 in covered in-network care subject to the deductible and pay $2,000.
You’ve now met your deductible, and your eligible out-of-pocket spending is $2,000.
Step 2: Start Coinsurance
Next, you receive a covered in-network service with an allowed cost of $5,000.
With 20% coinsurance, you pay $1,000. Your eligible out-of-pocket total is now $3,000:
$2,000 deductible + $1,000 coinsurance = $3,000
Step 3: Continue Sharing Costs
As you receive additional covered in-network care, eligible copayments and coinsurance continue adding to your out-of-pocket total.
Step 4: Reach the Out-of-Pocket Maximum
Once eligible spending reaches $9,000, your plan pays 100% of covered in-network benefits for the rest of the plan year.
You still pay your premium and any expenses that aren’t covered by the plan.
The basic progression is:
Pay toward the deductible → Share eligible costs → Reach the out-of-pocket maximum → Plan pays 100% of covered in-network benefits for the rest of the plan year
Individual vs. Family Deductibles and Out-of-Pocket Maximums
Family health insurance may include both individual and family deductibles and out-of-pocket limits. One family member may reach an individual threshold before the household reaches the family threshold.
When comparing family plans, look at:
How these amounts accumulate depends on the plan.
How Premiums Fit Into Your Health Insurance Costs
Your premium is what you pay to keep your coverage active. It’s separate from your deductible and out-of-pocket maximum and doesn’t count toward either threshold.
That’s why the monthly premium shouldn’t be the only number you compare. A lower-premium plan may have different deductibles, copayments, coinsurance, or out-of-pocket limits.
When comparing health insurance plans, consider both the cost of maintaining coverage and what you could pay when receiving care.
How to Compare Deductibles and Out-of-Pocket Maximums
The right balance depends on your health care needs, household, budget, and available plans.
Consider:
If you’re comparing different coverage options, understanding ACA vs. private health insurance can help you evaluate your choices.
Can Financial Assistance Lower Health Insurance Costs?
Depending on eligibility, financial assistance may lower Marketplace health insurance costs.
Premium tax credits can reduce eligible consumers’ monthly premiums. Some people who qualify for additional savings and enroll in an eligible Silver plan may also receive cost-sharing reductions that lower deductibles, copayments, coinsurance, and out-of-pocket maximums.
Coverage Fox can help you determine whether you may qualify for health insurance subsidies and compare available plans.
Frequently Asked Questions About Deductibles and Out-of-Pocket Maximums
Is a Deductible Included in the Out-of-Pocket Maximum?
For Marketplace plans, eligible amounts paid toward the deductible for covered in-network services generally count toward the out-of-pocket maximum.
Do Copays Count Toward the Deductible?
It depends on the plan. Some copayments may apply before you meet your deductible without counting toward it.
Eligible copayments for covered in-network care generally count toward a Marketplace plan’s out-of-pocket maximum.
What Happens After I Reach My Deductible?
Your plan generally begins paying its share of eligible expenses according to its terms. You may continue paying copayments or coinsurance until reaching your out-of-pocket maximum.
What Happens After I Reach My Out-of-Pocket Maximum?
Your plan generally pays 100% of covered in-network benefits for the rest of the plan year. Premiums and non-covered expenses can still be your responsibility.
Do Deductibles and Out-of-Pocket Maximums Reset Every Year?
They generally apply to a plan year and reset when a new plan year begins. Check your plan documents for the dates and rules that apply to your coverage.
