2026-04-20 · health, personal

Updated: 2026-11-03

By InsuraFAQ Editorial Team · Reviewed for accuracy

Adult at a home desk reviewing a printed health plan Summary of Benefits with the out-of-pocket maximum line highlighted

Out-of-Pocket Maximum Explained

At a glance

The out-of-pocket maximum is the absolute cap on what you pay for covered in-network care in a plan year. Deductibles, copays, and coinsurance all count toward it; premiums and out-of-network charges do not. Once you hit the cap, your health plan pays 100% of covered in-network services for the rest of the year. For 2026 Marketplace plans, the federal ceiling is $10,600 for an individual and $21,200 for a family. Compare premiums as well as the plan’s own limit.

Key takeaways

The out-of-pocket maximum is the most you will pay for covered in-network services in a plan year. Once you reach it, your plan pays 100% of covered in-network costs.
Deductibles, copays, and coinsurance all count toward the out-of-pocket maximum. Premiums and out-of-network costs generally do not.
For 2026 Marketplace plans, the federal limit is $10,600 for an individual and $21,200 for a family.
Plans with a lower out-of-pocket maximum typically charge higher monthly premiums.

Introduction

If you have ever worried about what a serious illness or accident could cost you, the out-of-pocket maximum is the number that answers that question. It limits your cost-sharing for covered in-network services in a plan year, not your total financial exposure. Premiums, non-covered care, and other excluded charges can still add to your costs.

This guide explains how the out-of-pocket maximum works, what counts toward it, what does not, and how to factor it into plan selection. It is written for anyone comparing health plans, facing large medical bills, or trying to understand their total worst-case spending.

What Is the Out-of-Pocket Maximum?

The out-of-pocket maximum (sometimes called the out-of-pocket limit) is a dollar amount set by your health plan. Once your combined spending on deductibles, copays, and coinsurance reaches that amount in a plan year, your insurer pays 100% of covered in-network services for the rest of the year.

How it works as a spending cap:

You pay your deductible, copays, and coinsurance as you receive care throughout the year.
Each of those payments accumulates toward your out-of-pocket maximum.
Once eligible spending reaches your plan’s limit, you generally stop paying cost-sharing for covered in-network services for the rest of the plan year.
Your insurer pays 100% of allowed charges for covered in-network services for the remainder of the plan year.

The out-of-pocket maximum resets at the start of each new plan year (January 1 for most plans, or your employer plan’s renewal date).

ACA Out-of-Pocket Limits

The Affordable Care Act (ACA) sets a federal ceiling on how high an out-of-pocket maximum can be for marketplace and most employer plans. The Centers for Medicare & Medicaid Services (CMS) updates these limits annually based on premium growth.

2026 Marketplace limits:

Individual: $10,600
Family: $21,200

HealthCare.gov lists the current Marketplace limits.

A Marketplace plan’s actual out-of-pocket maximum may be lower than the federal limit. Other coverage may be subject to different rules; review your plan documents.

These limits apply to in-network covered services only. If you go out of network, your spending may not count toward the limit at all (depending on your plan’s design).

What Counts Toward the Out-of-Pocket Maximum

The following payments for in-network covered services accumulate toward your annual limit:

Deductible payments. Eligible amounts you pay toward your deductible. Some covered services may have cost-sharing before the deductible is met.
Copays. Flat-fee payments for doctor visits, prescriptions, urgent care, and other services.
Coinsurance. Your percentage share of bills after meeting your deductible.

All three types of cost-sharing add up together. You do not need to track them separately; your insurer tracks your progress toward the maximum and should notify you when you are close.

What Does NOT Count

Several types of spending do not accumulate toward your out-of-pocket maximum:

Monthly premiums. The amount you pay to keep your plan active is separate from cost-sharing.
Out-of-network costs. Most plans exclude out-of-network spending from the in-network maximum. Some PPO plans have a separate (higher) out-of-network maximum.
Non-covered services. If your plan does not cover a service, you pay the full cost and none of it counts.
Balance-billed amounts. If a provider charges more than your plan’s allowed amount, the excess does not count.
Costs above the allowed amount. Any charges that exceed what your plan considers reasonable and customary.
Standalone vision plan costs. A separate vision insurance policy can have its own benefits and cost-sharing. Check both policies to see which expenses count toward each limit.

Understanding what does not count is important because these expenses can add to your total medical spending even after you reach the maximum.

Here is a step-by-step example showing how all cost-sharing components interact through a plan year.

Your plan:

Annual deductible: $2,000
Coinsurance: 20% (you) / 80% (insurer) after deductible
Out-of-pocket maximum: $7,000

Scenario: You have a $30,000 surgery plus follow-up care.

Phase 1: Deductible ($0 to $2,000 spent) In this simplified example, assume the surgery is covered in-network, its allowed charges apply to the deductible, and no prior spending counts. You pay the first $2,000 of those allowed charges. Your out-of-pocket total is now $2,000.

Phase 2: Coinsurance ($2,000 to $7,000 spent) After your deductible, you pay 20% of remaining costs. On the next $25,000 of charges, you would owe $5,000 (20%). Your out-of-pocket total reaches $7,000 ($2,000 deductible + $5,000 coinsurance).

Phase 3: Plan pays 100% (after $7,000 spent) You have hit your out-of-pocket maximum. For the rest of the plan year, your insurer pays 100% of covered in-network services. You may still owe premiums and charges excluded from the limit, such as non-covered or out-of-network care.

Eligible in-network cost-sharing in this example: $7,000. Premiums and excluded charges are additional.

Out-of-Pocket Maximum vs Deductible

These two terms are often confused but serve different purposes:

Deductible: The amount you pay for applicable covered services before the plan pays its share. Some services may be covered before you meet it; copays or coinsurance may still apply afterward.
Out-of-pocket maximum: The plan-year limit on eligible covered in-network cost-sharing. Once you reach it, the plan pays 100% of allowed charges for covered in-network services. Premiums and excluded expenses remain separate.

The deductible applies to specified covered services; some benefits may be covered before it is met. The out-of-pocket maximum limits eligible in-network cost-sharing, not premiums or excluded expenses. Both generally reset at the start of a plan year. HealthCare.gov explains deductibles. Among covered workers with a single-coverage out-of-pocket maximum, KFF’s 2025 employer survey found that 12% had a limit of $2,000 or less and 21% had a limit above $6,000.

How to Choose a Plan Based on Out-of-Pocket Maximum

The out-of-pocket maximum helps bound eligible in-network cost-sharing, but it is not a cap on premiums or excluded expenses. When choosing a plan, consider:

Lower out-of-pocket maximum (higher premiums):

Better for people with chronic conditions requiring ongoing treatment
Better for families expecting significant medical use (planned surgeries, pregnancies)
Provides more predictable budgeting for healthcare costs
Limits financial exposure if an unexpected health event occurs

Higher out-of-pocket maximum (lower premiums):

May save money if you rarely use medical services
Works well paired with a Health Savings Account (HSA) that can cover unexpected costs
Good for generally healthy individuals or those with emergency funds to cover potential expenses

How to decide: Estimate your likely annual medical spending. If the savings on premiums from a high-OOPM plan exceed the extra you would pay in cost-sharing in a typical year, the higher maximum may make sense. But if you have ongoing medical needs or are risk-averse, the lower maximum provides a tighter safety net.

For help comparing total plan costs, see how to compare insurance quotes.

Frequently asked questions

Does the out-of-pocket maximum reset each year?

Yes. Your out-of-pocket accumulation resets to $0 at the start of each new plan year. For most marketplace and employer plans, this happens on January 1. Amounts paid in the previous year do not carry over.

Family coverage may have individual and family limits, depending on the plan and applicable rules. Check the plan documents to see how each person’s eligible covered in-network spending accumulates and when the plan pays its share.

Do prescription costs count toward the out-of-pocket maximum?

Yes. Copays and coinsurance for covered prescriptions filled at in-network pharmacies count toward your maximum. However, if you use a manufacturer coupon or discount card, some plans do not count those reduced amounts toward your accumulator.

What if I switch plans mid-year?

A mid-year switch can affect how prior spending is credited. Do not assume it transfers or resets: ask the old and new plans how they handle your specific change before enrolling.

Is there an out-of-pocket maximum for Medicare?

Original Medicare (Parts A and B) does not have an out-of-pocket maximum, which is one reason many beneficiaries buy Medigap supplemental coverage. Medicare Advantage plans (Part C), however, are required to have an annual out-of-pocket maximum for in-network services. For more on Medicare, see our Medicare basics guide.

Next Steps

Review your plan’s Summary of Benefits. Find your out-of-pocket maximum and confirm whether it applies separately to in-network and out-of-network care.
Track your spending. Log into your insurer’s portal to see how much you have accumulated toward your maximum this year.
Compare plans during open enrollment. Use total yearly cost (premiums + likely out-of-pocket spending) rather than premium alone. See the health insurance enrollment guide for timing and steps.
Learn related cost-sharing concepts. Read our copay vs coinsurance vs deductible comparison and deductible explainer for the full picture of how health insurance costs work.
Estimate your costs. For guidance on comparing premiums and other plan costs, see our health insurance cost guide.