Health insurance basics
What is an Out-of-Pocket Maximum?
The out-of-pocket maximum, sometimes called a stop-loss limit, is the point where you stop paying toward covered medical bills for the year and your insurance plan pays 100%.
$0 deductible
50% of a $20,000 bill
You pay $10,000$10,000 out-of-pocket maximum$5,000 deductible
$5,000 + 20% of the remaining $15,000
You pay $8,000$8,000 out-of-pocket maximumTie the whole example together
The medical bill was $20,000. You paid the first $5,000 as your deductible. That left $15,000. Your 20% share of that $15,000 was $3,000.
In this example, the $5,000 deductible + the $3,000 you paid through coinsurance = an $8,000 out-of-pocket maximum.
A $0 deductible does not always mean you pay less
Plan A has a $0 deductible, 50% coinsurance, and a $10,000 out-of-pocket maximum. On a $20,000 bill, your 50% share is $10,000.
Plan B has a $5,000 deductible, 20% coinsurance, and an $8,000 out-of-pocket maximum. You pay the $5,000 deductible plus $3,000 in coinsurance. Your total is $8,000. In this example, the plan with no deductible costs you $2,000 more.
What happens when you reach your out-of-pocket maximum?
You have reached the stop-loss point for this example. Your insurance plan pays 100% of additional covered medical bills for the rest of the plan year.
Some plans also count copays toward this number. Your monthly payment for the insurance plan does not count.
The Ninja takeaway
Deductibles and coinsurance both matter, but the number that really matters is your out-of-pocket maximum. It tells you how much you could be responsible for when you need a lot of covered medical care.
Do not assume that a $0 deductible automatically makes a plan less expensive. Compare the out-of-pocket maximum—and the monthly price—before choosing. Every Plan is different. This is why HealthPlanNinja customizes a plan specifically for your needs. Our licensed advocates are always free.