What is an Out-of-Pocket Maximum?
When you’re shopping for health insurance, a key concept to understand is your out-of-pocket maximum. This refers to the maximum yearly amount that you can be charged for covered treatments, exams, medications, and other care you receive. A simple way to define an out-of-pocket maximum is the annual limit on what you pay for covered medical care. Once you reach your out-of-pocket maximum, your insurance plan will kick in and pay for your covered care for the remainder of the plan year.
Key Terms Explained
Knowing some basic insurance terminology—like the difference between a deductible versus out-of-pocket maximum—will empower you to make informed decisions about your health care coverage. Here are three important terms to learn when comparing plans:
- Deductible: Your deductible is the amount you pay out-of-pocket for covered medical services before your coverage begins paying for care. It can sometimes be confused with out-of-pocket maximums. The difference is that when you reach your deductible, your insurer begins to pay the partial cost of your covered care. When you reach your out-of-pocket maximum, your insurer takes over and pays 100 percent of your remaining covered costs. Both your deductible and out-of-pocket maximum reset every plan year, and your deductible counts toward your out-of-pocket maximum.
- Coinsurance: Once you reach your deductible, your insurance provider will begin partially paying for covered treatments and you will be responsible for paying the other portion. This is referred to as coinsurance and is expressed as a percentage. For example, if you have 30 percent coinsurance, you’ll pay for 30 percent of your care while your insurance provider will pay the remaining 70 percent until you hit your out-of-pocket maximum. At that point, the insurer will start paying 100 percent of your expenses for the remainder of the plan year.
- Copay: Your copayment, or copay, is a predetermined, flat amount you pay for a covered service, such as a visit to your doctor’s office. UPMC Health Plan Individual and Family plans copays range from $20 to $80. Some plans even offer a $0 copay for certain services, like UPMC First Care™ for first-time visits to PCPs and specialists. Most plan copays don’t apply to the deductible. Any one or a combination of covered family members must meet the family deductible before covered services are paid, for any member on the plan.
How Do Out-of-Pocket Maximums Work?
Now that we’ve defined some key insurance terms, let’s explore how coverage works in real life. Let’s imagine a policyholder named Steve who has a $2,000 deductible, 25 percent coinsurance, and a $5,000 out-of-pocket maximum.
Steve gets injured in an accident, resulting in $3,000 in medical bills, including medications. Steve pays $2,000 out-of-pocket. Now that he’s reached his $2,000 deductible, Steve’s insurance will help cover his remaining costs. Steve will pay 25 percent of the remaining costs, and his insurer will pay the other 75 percent. Once Steve’s total spending reaches $5,000 (his out-of-pocket maximum), his insurance plan will pay the cost of his covered expenses until the policy year resets.
What counts toward my out-of-pocket maximum?
By now, you’re likely wondering what types of payments count toward your out-of-pocket maximum and, just as important, what types of payments don’t count. Here are some examples of payments that generally go toward your out-of-pocket maximum, depending on your insurance plan:
- Copays
- Coinsurance
- Your deductible
These types of payments generally don’t count toward your limit:
- Your monthly premium
- Payments for medical services that aren’t covered by your plan
What happens after I meet my out-of-pocket maximum?
Once you reach your out-of-pocket maximum, your insurance provider will step in to pay for 100 percent of any covered care you receive for the rest of the plan or policy period. That means you won’t have to make further copayments, coinsurance payments, or other types of payments until the period resets. Be sure to review the policy carefully when selecting a plan to understand the out-of-pocket maximum.
Understanding Individual vs. Family Out-of-Pocket Maximums
What is an individual versus a family out-of-pocket maximum? Some health insurance plans are designed to cover multiple people, such as the policyholder’s spouse and/or children. Since this type of plan covers more people, the out-of-pocket maximum for a family is higher than the maximum limit for an individual — in most instances, about double the amount. Be sure to review the policy carefully to understand the out-of-pocket maximum. To see UPMC Health Plan offerings view the 2025 guide.
When an individual reaches their maximum, the insurer pays for 100 percent of their covered care for the rest of the policy term. The costs that each person pays as an individual also count toward the family out-of-pocket maximum. If any combination of family members’ costs reach your family out-of-pocket maximum, your insurer will pay for 100 percent of your family’s covered services until the term period ends.
Using Out-of-Pocket Maximums to Determine the Right Plan for You
While it’s important to understand your out-of-pocket maximums, they aren’t the only factor that should influence your decision when it comes to choosing a plan. It’s equally important to consider the relationship between the out-of-pocket maximum and your monthly premium, or the amount you pay each month to keep your policy active.
Generally speaking, the higher the out-of-pocket maximum, the lower the monthly premium and vice versa. For example, one person might pay a premium of $550 and have an out-of-pocket maximum of $4,000, while another person’s premium is $400 but their out-of-pocket limit is $6,000. Even if the out-of-pocket limit seems low and easy to reach, you may end up paying more in the long run if the plan has a high monthly premium. On the other hand, paying a lower monthly premium might be worth a higher out-of-pocket maximum, depending on the type of coverage you desire.
If you still have questions, don’t worry. Finding affordable health care shouldn’t be stressful. With UPMC Health Plan, it’s fast and easy to get enrolled and keep your family’s health protected. Explore the health insurance plans we offer for families and individuals, or contact us today for live, one-on-one support.
Out-of-Pocket Maximum FAQs
What is a good out-of-pocket maximum?
Most out-of-pocket maximums range from $6,300 to $9,200 for individuals and $12,600 to $18,400 for families. For example, the 2025 out-of-pocket maximum for a UPMC Health Plan Affordable Care Act (ACA) plan is $6,300 to $9,200 for individuals and $12,600 to $18,400 for families.
When comparing different plans’ out-of-pocket maximums, be sure to consider factors like the deductible, copayments, and coinsurance, along with the monthly premium you’ll pay. You should also consider factors like whether you need a specialist referral, whether your preferred provider is in-network, and what types of payments will count toward your out-of-pocket maximum under the plan.
Do I have to pay a copay after my out-of-pocket maximum is met?
Generally speaking, no. Once you reach your out-of-pocket maximum, your insurance plan will pay the full cost of your covered services until the policy year ends.
Does coinsurance count toward my out-of-pocket maximum?
Generally speaking, yes. Most insurance plans count your coinsurance payments toward your out-of-pocket maximum.