Health Insurance Terms & Terminology: Out-of-Pocket Maximum

When having to use your health insurance, there are a few different terms you’ll want to be aware of and how they relate to your specific plan. Those terms are deductible, coinsurance, and out-of-pocket maximum (OOP).

While you’re most likely familiar with a deductible, as it’s similar to the deductible you have on your auto insurance policy, coinsurance and out-of-pocket maximum tend to need more explanation.

You can read more about how a deductible works and how coinsurance works, but for a quick refresher, the deductible is the amount of expenses you’re responsible for before your benefits kick in, and coinsurance is the percentage of expenses you’ll be responsible in sharing with the insurer after meeting your deductible. The next logical question is, “well how high can all of that combined go?” The answer is that it can never exceed OOP.

For a 2021 Obamacare plan, the out-of-pocket maximum is $8,550 for an individual and $17,100 for a family. Even those two numbers can be slightly confusing, but what the numbers mean is that for an individual, the OOP, which includes the deductible, any coinsurance paid, and in some cases, any copays paid during a calendar year cannot exceed $8,550. For a family, regardless of the size of the family, that number cannot exceed $17,100.

Much of the time policy holders don’t ever reach this out-of-pocket maximum, but if there’s a major health problem, illness, or an accident, expenses can climb rapidly. Fortunately, no matter how high those expenses climb, you’ll never be responsible for more than the OOP.