Using your insurance benefits to pay for therapy can involve all kinds of unfamiliar terms and phrases. We’re here to explain the idea of an out-of-pocket maximum and how it affects your benefits.
What is an out-of-pocket maximum?
An out-of-pocket maximum is the most you will have to pay each year for healthcare services covered by your insurance plan.
Once you meet your out-of-pocket maximum, your health insurance will cover all of the remaining costs for your covered services that year, as long as you use in-network providers.
For example, if your out-of-pocket maximum is $7,000, your insurance will cover all costs after you pay a total of $7,000 toward your covered healthcare services that year.
Which costs count toward my out-of-pocket maximum?
There are three categories of expenses that count toward your out-of-pocket maximum: deductibles, copayments, and coinsurance.
Your deductible is the amount you pay toward covered healthcare services before your insurance starts to cover costs for those services.
- For example, if your deductible is $3,000, you will have to pay $3,000 total for covered services before your insurance starts making payments.
- Your deductible counts toward your out-of-pocket maximum.
Copayments are payments you make toward routine covered services at the time you get the service.
- For example, you might pay a $30 copayment every time you see your primary care doctor.
- Copayments usually do not count toward your deductible, but they do count toward your out-of-pocket maximum.
Coinsurance is a percentage of the cost for covered services that you pay after your deductible has been met.
- For example, if you’ve already paid your full deductible for the year, then you might pay 15% of the cost for a covered service while your insurance company pays the remaining 85%.
- Coinsurance does not usually count toward your deductible, but it does count toward your out-of-pocket maximum.
All of the above forms of expenses count toward your out-of-pocket maximum. When all three combined meet your out-of-pocket maximum, your insurance company covers the costs of your covered services for the remainder of the year, as long as you use in-network providers.
Which costs don’t count toward my out-of-pocket maximum?
There are two major kinds of costs that don’t count toward your out-of-pocket maximum: your premium payments, and payments for any service that is not covered by your insurance plan.
Your premium is the amount you pay regularly for your insurance plan. If you have insurance through your job, then your premium is probably deducted from your paycheck. Your premium payments do not count toward your out-of-pocket maximum, and you still have to pay your premium after your out-of-pocket maximum has been met.
The other major kind of healthcare cost that doesn’t count toward your out-of-pocket maximum is payment for services not covered by your plan. For example, if your plan does not cover acupuncture services and you pay for acupuncture sessions out of pocket, the cost of those sessions does not count toward your out-of-pocket maximum.
How do I know what my out-of-pocket maximum is?
Out-of-pocket maximums can vary widely, depending on your insurance company and the specifics of your plan.
Here are three ways to find out what your out-of-pocket maximum is:
- Check your plan documents: Your paper or digital copy of your plan documents should clearly specify what your out-of-pocket maximum is.
- Use your online portal: Most insurance companies have an online portal where you can access your plan details and find out what your out-of-pocket maximum is.
- Contact customer service: If you can’t find your out-of-pocket maximum or are unclear on the details of your specific plan, you can always contact your insurance company directly. Their customer service phone number is likely available on their website, and it’s usually printed on the back of your insurance card as well.