What is the out-of-pocket maximum in an ACA plan?
How does the out-of-pocket maximum protect me from high healthcare costs with my ACA insurance?
The out-of-pocket maximum is a key feature of your ACA health insurance plan that helps protect you from high medical costs by capping the total amount you’ll have to pay for covered healthcare services in a given year. Once you reach this limit, your insurance will cover 100% of your eligible medical expenses for the remainder of the year. Here’s how the out-of-pocket maximum works and how it shields you from significant healthcare expenses:
1. What Is the Out-of-Pocket Maximum?
The out-of-pocket maximum is the most you will have to pay for covered healthcare services in a calendar year. After you’ve reached this limit, your health insurance plan will pay 100% of the costs for covered services for the rest of the year.
The out-of-pocket maximum includes costs such as:
Deductibles (the amount you pay before insurance starts sharing costs).
Copayments (fixed fees you pay for services like doctor visits).
Coinsurance (your share of the cost for services, usually a percentage of the total cost).
Preventive services, like annual checkups and screenings, are usually covered at no cost to you and do not count toward your out-of-pocket maximum.
2. What Are the Limits for Out-of-Pocket Maximums?
The ACA sets limits on how high your out-of-pocket maximum can be. For 2024, the out-of-pocket maximums are:
$9,450 for an individual.
$18,900 for a family.
These limits apply to all ACA-compliant plans, including Bronze, Silver, Gold, and Platinum plans. Your actual out-of-pocket maximum will depend on the specific plan you choose, with Bronze plans typically having the highest out-of-pocket maximums and Platinum plans having the lowest.
3. What Costs Count Toward the Out-of-Pocket Maximum?
The following costs count toward your out-of-pocket maximum:
Deductibles: The amount you pay for covered services before your insurance starts sharing costs.
Copayments: Fixed amounts you pay for specific services, like doctor visits or prescription drugs.
Coinsurance: The percentage of the cost you pay for services after meeting your deductible (e.g., if your coinsurance is 20%, you pay 20% of the cost while insurance covers 80%).
Once these payments add up to the out-of-pocket maximum, you won’t have to pay any more for covered services for the rest of the year.
4. What Does Not Count Toward the Out-of-Pocket Maximum?
Certain costs do not count toward your out-of-pocket maximum, including:
Monthly premiums: The amount you pay each month for your health insurance plan.
Out-of-network services: If your plan only covers in-network care, services from out-of-network providers may not count toward your out-of-pocket maximum, and you may have to pay the full cost of these services.
Non-covered services: If your plan doesn’t cover certain services or treatments, the cost of these will not count toward your out-of-pocket limit.
5. How Does the Out-of-Pocket Maximum Protect You?
The out-of-pocket maximum acts as a financial safety net, ensuring that you won’t face unlimited medical bills if you require extensive medical care. Here’s how it works to protect you:
Limits on Expenses: Once your total out-of-pocket spending on covered services reaches the set maximum, you no longer have to pay for services like hospital visits, surgeries, or prescription medications for the rest of the year.
Peace of Mind: The out-of-pocket maximum provides peace of mind, knowing that no matter what medical expenses you incur, your financial liability is capped for the year.
100% Coverage After Maximum: After hitting the out-of-pocket maximum, your insurance will cover 100% of the costs for all covered healthcare services, so you won’t need to worry about any additional bills.
6. Example: How the Out-of-Pocket Maximum Works
Let’s say you have a Silver plan with a $4,000 deductible, 20% coinsurance, and a $9,000 out-of-pocket maximum. Here’s how the plan would work for a major medical expense:
You have a surgery that costs $50,000.
You first pay your $4,000 deductible out of pocket.
After meeting the deductible, your 20% coinsurance kicks in. You’ll pay 20% of the remaining $46,000, which equals $9,200.
However, because your out-of-pocket maximum is $9,000, you won’t have to pay the full $9,200 in coinsurance. You’ll only pay $5,000 more, since your deductible and coinsurance together now total your $9,000 out-of-pocket maximum.
Once you hit your $9,000 out-of-pocket maximum, your insurance covers the remaining cost of your surgery (and any other covered services) for the rest of the year.
In this case, your total out-of-pocket spending for the year would be $9,000, no matter how high your actual medical bills go.
7. Lowering Out-of-Pocket Costs With Cost-Sharing Reductions (CSRs)
If your income is between 100% and 250% of the federal poverty level (FPL), you may qualify for cost-sharing reductions (CSRs), which can lower your out-of-pocket maximum and other out-of-pocket costs. To receive these reductions, you must enroll in a Silver plan through the ACA Marketplace.
With CSRs, your out-of-pocket maximum, deductible, and coinsurance could be significantly lower, further reducing the amount you have to pay before your insurance covers 100% of the costs.
Key Takeaways:
The out-of-pocket maximum is the most you’ll have to pay for covered services in a year, after which your insurance covers 100% of the costs.
For 2024, the out-of-pocket maximum is $9,450 for individuals and $18,900 for families.
Once you reach your out-of-pocket maximum, you won’t have to pay additional costs for deductibles, copayments, or coinsurance for covered services for the rest of the year.
Costs like monthly premiums, out-of-network care, and non-covered services do not count toward the out-of-pocket maximum.
For personalized help understanding your out-of-pocket costs or selecting a plan that fits your healthcare needs, schedule an appointment with a Tsunami Advisor here: Schedule an Appointment.
