Out-of-Pocket Maximum Explained: What It Is and When It Kicks In

If you have ever looked at a health insurance plan's Summary of Benefits and Coverage, you have probably seen the term "out-of-pocket maximum" listed alongside your deductible, copays, and coinsurance. It might look like just another number in a sea of confusing figures, but the out-of-pocket maximum is arguably the most important financial protection your health insurance provides.

The out-of-pocket maximum is the absolute cap on what you will spend on covered in-network medical care in a single plan year. Once you hit it, your insurance pays 100 percent of covered services for the rest of the year. Understanding how it works, what counts toward it, and how to use it strategically can save you thousands of dollars — especially in years when you face significant medical expenses.

What Is the Out-of-Pocket Maximum?

The out-of-pocket maximum — sometimes called the out-of-pocket limit — is the most you will pay during a plan year for covered healthcare services from in-network providers. It is your financial ceiling. Once your deductible payments, copays, and coinsurance add up to this amount, your health plan picks up the tab at 100 percent for the remainder of the plan year.

Think of it this way: your deductible is the amount you pay before your insurance starts sharing costs. Coinsurance and copays are how you share costs with your insurer after the deductible. And the out-of-pocket maximum is the point at which your insurer says, "We will take it from here," and covers everything.

This protection exists because of the Affordable Care Act. Before the ACA, many health insurance plans had no annual cap on out-of-pocket spending, which meant a serious illness or accident could result in tens or even hundreds of thousands of dollars in medical bills that fell on the patient. The out-of-pocket maximum changed that by guaranteeing that every ACA-compliant plan has a hard spending limit.

The 2026 ACA Out-of-Pocket Maximum Limits

Each year, the Department of Health and Human Services sets the maximum allowable out-of-pocket limit for ACA-compliant health insurance plans. For 2026, these limits are:

• $9,450 for an individual (self-only) plan
• $18,900 for a family plan

These are ceilings, not targets. No ACA-compliant plan — whether purchased through the marketplace, offered by an employer, or bought directly from an insurer — can set an in-network out-of-pocket maximum higher than these amounts. However, many plans set their limits well below the ACA cap. A Gold plan might have a $6,000 out-of-pocket maximum, while a Platinum plan could be as low as $2,000.

These limits have increased over time due to inflation. For context, the 2024 limit was $9,100 for individuals and $18,200 for families, and the 2025 limit was $9,200 for individuals and $18,400 for families. The incremental increases each year reflect the rising cost of healthcare.

What Counts Toward Your Out-of-Pocket Maximum

Not every dollar you spend on healthcare counts toward your out-of-pocket maximum. Only certain types of cost-sharing for covered in-network services accumulate toward the limit. Understanding what counts — and what does not — is critical for tracking your progress and planning your care.

Expenses that count toward your out-of-pocket maximum:

• Deductible payments. Every dollar you pay toward your annual deductible counts toward the out-of-pocket maximum. If you have a $3,000 deductible and you pay all of it, you are already $3,000 closer to the cap.
• Copayments. The flat fees you pay for doctor visits, specialist appointments, urgent care, prescriptions, and emergency room visits all count toward the out-of-pocket maximum. Each $30 primary care copay and each $50 specialist copay adds up.
• Coinsurance. The percentage of costs you pay after meeting your deductible counts toward the out-of-pocket maximum. If you owe 20 percent of a $10,000 surgery, that $2,000 coinsurance payment goes toward your cap.

Expenses that do NOT count toward your out-of-pocket maximum:

• Monthly premiums. Your premium is the cost of having insurance, not the cost of using it. Even if you pay $500 a month in premiums ($6,000 a year), none of it counts toward your out-of-pocket maximum.
• Out-of-network charges. Costs for services received from providers outside your plan's network typically do not count toward your in-network out-of-pocket maximum. Some PPO plans track out-of-network costs toward a separate, higher limit, but many plans provide no cap on out-of-network spending at all.
• Non-covered services. If your plan does not cover a particular service — such as cosmetic surgery, experimental treatments, or services that require prior authorization you did not obtain — those costs are entirely your responsibility and do not count toward any limit.
• Balance-billed amounts. If an out-of-network provider bills you for the difference between their charge and the amount your insurer pays, that excess amount does not count toward your out-of-pocket maximum. The No Surprises Act provides some protection against unexpected balance billing in emergency situations and at in-network facilities, but it does not eliminate the issue entirely.
• Charges above the allowed amount. If a provider charges more than your insurer's allowed amount for a service, you may owe the difference. This excess does not count toward the out-of-pocket maximum.

How the Out-of-Pocket Maximum Works: A Step-by-Step Example

The best way to understand the out-of-pocket maximum is to walk through a realistic scenario. Let us say you have the following plan for 2026:

• Monthly premium: $450
• Deductible: $2,000
• Coinsurance: 20% (you pay) / 80% (plan pays) after deductible
• Out-of-pocket maximum: $7,000

January through March: You have routine visits with $30 copays totaling $90. You also have lab work costing $200, which you pay in full because you have not met your deductible. Running out-of-pocket total: $290.

April: You need an MRI that costs $2,500 at the negotiated rate. You still owe $1,710 on your deductible ($2,000 minus the $290 already paid). You pay $1,710 to finish the deductible. The remaining $790 of the MRI is subject to 20 percent coinsurance, so you pay $158. Running out-of-pocket total: $2,158.

June: You are diagnosed with a condition requiring surgery. The procedure costs $40,000 at the negotiated rate. At 20 percent coinsurance, your share would be $8,000. But your out-of-pocket maximum is $7,000, and you have already paid $2,158. You only owe $4,842 more before hitting the cap. You pay $4,842, reaching your $7,000 out-of-pocket maximum. Your insurance covers the remaining balance of the surgery.

July through December: For the rest of the plan year, your insurance pays 100 percent of all covered in-network services. Follow-up appointments, physical therapy, prescriptions, imaging — all covered in full. You pay nothing except your monthly premium.

The bottom line: Without the out-of-pocket maximum, your 20 percent share of a $40,000 surgery alone would be $8,000. Instead, your total out-of-pocket cost for the entire year — including every copay, deductible payment, and coinsurance charge — was capped at $7,000.

How the Out-of-Pocket Maximum Resets Annually

Your out-of-pocket maximum resets at the start of each plan year. For most individual and marketplace plans, the plan year begins January 1. For some employer plans, the plan year may start on a different date, such as July 1 or October 1. When the reset happens, your accumulator goes back to zero, and you start paying toward your deductible and out-of-pocket maximum all over again.

This annual reset has important implications for planning your care. If you are close to meeting your out-of-pocket maximum in November, it may make sense to schedule elective procedures before December 31 rather than waiting until the new year, when you would start from zero. Conversely, if you are early in the plan year and have not accumulated much toward your limit, you might benefit from delaying non-urgent care until later in the year if you anticipate other significant medical expenses.

One thing the reset does not affect: if you switch plans mid-year through a qualifying life event, your out-of-pocket accumulator may or may not transfer to the new plan. In most cases, it does not. This means switching plans mid-year can effectively reset your progress toward the out-of-pocket maximum, requiring you to start over — a significant financial consideration.

Embedded vs. Aggregate Family Out-of-Pocket Maximums

If you are on a family plan, understanding the difference between embedded and aggregate out-of-pocket maximums is essential. These two structures determine how costs are tracked and when 100 percent coverage kicks in for individual family members.

Embedded out-of-pocket maximum

An embedded structure includes an individual out-of-pocket limit within the overall family limit. For example, a family plan might have a $14,000 family out-of-pocket maximum with a $7,000 embedded individual limit. If one family member racks up $7,000 in out-of-pocket costs, the plan covers 100 percent of that person's care for the rest of the year — even if the family as a whole has not reached the $14,000 total.

This protects individual family members from bearing a disproportionate share of costs. Without an embedded limit, one person could theoretically pay the entire family out-of-pocket maximum on their own.

Aggregate out-of-pocket maximum

An aggregate structure has a single family limit with no individual cap built in. All family members' costs are pooled together, and 100 percent coverage only kicks in once the combined total reaches the family maximum. In theory, this means one family member could pay the entire family limit before the plan covers everything.

The ACA's protection: To prevent abuse of the aggregate structure, the ACA requires that no individual within a family plan can be required to pay more than the individual out-of-pocket limit ($9,450 in 2026), regardless of the plan structure. This effectively means most plans now use embedded out-of-pocket maximums, even if they use aggregate deductibles.

When shopping for family coverage, always check whether the plan uses an embedded or aggregate structure. An embedded out-of-pocket maximum generally provides better financial protection for families, especially when one family member needs significantly more care than the others.

When 100 Percent Coverage Kicks In

Once you reach your out-of-pocket maximum, your health insurance plan covers 100 percent of covered in-network services for the rest of the plan year. This means you will pay zero dollars for:

• Doctor visits, specialist appointments, and urgent care
• Hospital stays, surgeries, and emergency room visits
• Prescription medications covered by your plan
• Lab work, imaging, and diagnostic tests
• Physical therapy, mental health services, and rehabilitation

However, 100 percent coverage has important boundaries. You still pay for:

• Monthly premiums, which are always due regardless of your out-of-pocket spending
• Out-of-network services, which are tracked separately or not covered
• Services your plan explicitly excludes from coverage

The transition to 100 percent coverage should happen automatically. Your insurance company tracks your out-of-pocket spending through what is called an accumulator. Once the total reaches the limit, claims processing should adjust automatically so you are not charged cost-sharing. If you continue to receive bills after reaching your out-of-pocket maximum, contact your insurer immediately to dispute them.

Out-of-Pocket Maximums by ACA Metal Tier

If you shop for health insurance on the ACA marketplace, plans are organized into four metal tiers: Bronze, Silver, Gold, and Platinum. Each tier represents a different balance between monthly premiums and out-of-pocket costs, and the out-of-pocket maximum varies significantly across tiers.

• Bronze plans have the lowest premiums but the highest out-of-pocket maximums, often reaching the ACA cap of $9,450 for individuals. The plan covers about 60 percent of total healthcare costs on average, leaving you responsible for 40 percent through deductibles and coinsurance. These plans are best for healthy people who want catastrophic protection at the lowest monthly cost.
• Silver plans offer moderate premiums and out-of-pocket maximums typically between $7,000 and $9,000 for individuals. The plan covers about 70 percent of costs. Silver plans are also the only tier eligible for cost-sharing reduction (CSR) subsidies, which can dramatically lower the deductible and out-of-pocket maximum for qualifying low-income enrollees.
• Gold plans have higher premiums but lower out-of-pocket maximums, often between $5,000 and $7,000 for individuals. The plan covers about 80 percent of costs. Gold plans are well-suited for people who use healthcare regularly and want more predictable, lower cost-sharing.
• Platinum plans carry the highest premiums but the lowest out-of-pocket maximums, sometimes as low as $1,500 to $3,000 for individuals. The plan covers about 90 percent of costs. These plans make sense for people who anticipate heavy healthcare use and want to minimize per-service costs.

When choosing between tiers, consider the total possible cost in a worst-case year: 12 months of premiums plus the out-of-pocket maximum. A Bronze plan with a $350 monthly premium and a $9,450 out-of-pocket maximum has a worst-case total of $13,650. A Gold plan with a $550 premium and a $6,000 out-of-pocket maximum has a worst-case total of $12,600 — less than the Bronze plan, even though the premium is higher. Learn more about how much health insurance costs in 2026 to make a more informed comparison.

How to Use the Out-of-Pocket Maximum Strategically

The out-of-pocket maximum is not just a safety net — it is a planning tool. If you know you will face significant medical expenses in a given year, you can use the out-of-pocket maximum to your advantage and potentially save thousands of dollars.

Stack procedures in the same plan year

If you need multiple expensive procedures — say, a knee replacement and cataract surgery — scheduling both in the same plan year means you only hit one out-of-pocket maximum. If you spread them across two plan years, you could pay the maximum twice. For a plan with a $7,000 out-of-pocket maximum, that is the difference between $7,000 and $14,000 in total out-of-pocket costs.

Front-load your care early in the year

If you anticipate high medical costs, try to schedule major procedures early in the plan year. If you hit your out-of-pocket maximum by March, you get nine months of 100 percent coverage for every other covered service you need. This is especially valuable for people with chronic conditions, ongoing therapy needs, or expensive prescription medications.

Take advantage of the window after hitting the maximum

Once you have reached your out-of-pocket maximum, schedule any covered care you have been putting off. Need that physical therapy you have been avoiding? Want a second opinion from a specialist? Need to refill expensive prescriptions? All of these services will be covered at 100 percent until your plan year resets. This is the time to take full advantage of your insurance.

Choose the right plan tier based on expected costs

If you know you will hit the out-of-pocket maximum — because you have a planned surgery, a chronic condition, or are expecting a baby — a higher-tier plan with a lower out-of-pocket maximum may actually cost you less over the year, even with higher premiums. Run the numbers: multiply monthly premium by 12, add the out-of-pocket maximum, and compare that worst-case total across plan options.

Keep all care in-network

This cannot be overstated: only in-network costs count toward your in-network out-of-pocket maximum. Every time you see an out-of-network provider, those costs typically do not accumulate toward your limit, pushing your effective spending ceiling even higher. Before any procedure, verify that every provider involved — the surgeon, the anesthesiologist, the facility, the lab — is in your plan's network.

Out-of-Pocket Maximum vs. Deductible: Understanding the Difference

People frequently confuse the out-of-pocket maximum with the deductible, but they serve very different functions in your health insurance plan.

The deductible is the amount you pay before your insurance starts sharing costs. If your deductible is $2,000, you pay the first $2,000 of covered services in full, and then your insurance kicks in with coinsurance or copays.

The out-of-pocket maximum is the total cap on everything you pay in a year — deductible plus copays plus coinsurance. If your out-of-pocket maximum is $7,000, that is the absolute most you will spend on covered in-network care, regardless of how large your medical bills get.

Here is how they relate: the deductible is always part of the out-of-pocket maximum. Your deductible payments count toward the out-of-pocket maximum, so you can think of the deductible as the first layer of your out-of-pocket spending. On some high-deductible health plans, the deductible and out-of-pocket maximum are actually the same amount — once you meet the deductible, the plan pays 100 percent. But on most plans, the out-of-pocket maximum is higher, because you continue paying copays and coinsurance after the deductible is met.

Special Situations: HSAs, HDHPs, and Employer Plans

Certain plan types have their own rules and considerations around the out-of-pocket maximum.

High-deductible health plans (HDHPs). HDHPs qualify you for a Health Savings Account (HSA), which offers triple tax advantages. For 2026, an HDHP must have a deductible of at least $1,650 for individuals or $3,300 for families, and the out-of-pocket maximum cannot exceed $8,300 for individuals or $16,600 for families. Note that these HDHP limits are lower than the general ACA limits, providing somewhat tighter cost protection.

Employer-sponsored plans. Employer plans must follow the same ACA out-of-pocket maximum rules as marketplace plans. However, employers often subsidize the cost of coverage, resulting in plans with out-of-pocket maximums that are significantly lower than the ACA cap. Some large employers offer plans with out-of-pocket maximums as low as $3,000 or $4,000.

Cost-sharing reduction (CSR) plans. If you earn between 100 and 250 percent of the federal poverty level and enroll in a Silver marketplace plan, you may qualify for cost-sharing reductions that significantly lower your deductible and out-of-pocket maximum. A standard Silver plan with a $9,000 out-of-pocket maximum might be reduced to $3,000 or less with CSR subsidies. These reductions are only available on Silver plans purchased through the marketplace.

Common Mistakes to Avoid

Even with a clear understanding of how the out-of-pocket maximum works, there are common pitfalls that catch people off guard.

• Assuming premiums count. Many people assume their monthly premium payments accumulate toward the out-of-pocket maximum. They do not. Premiums are a separate expense entirely.
• Going out of network without realizing it. During a hospital stay, you might be treated by an out-of-network anesthesiologist or radiologist without knowing it. While the No Surprises Act provides some protections, always verify network status for all providers involved in your care.
• Not tracking your accumulator. Insurance companies occasionally make errors in tracking out-of-pocket spending. A copay might not get recorded, or a claim might be processed incorrectly. Log into your insurer's portal regularly and compare their accumulator against your own records of payments.
• Splitting procedures across plan years. If you schedule surgery in December and follow-up care in January, you may be paying toward two separate out-of-pocket maximums. Whenever possible, consolidate care within the same plan year.
• Ignoring the out-of-pocket maximum when choosing a plan. Many people focus only on the monthly premium and the deductible when shopping for insurance. But the out-of-pocket maximum determines your true worst-case financial exposure. A plan with a low premium and low deductible but a high out-of-pocket maximum can still leave you with a massive bill after a serious medical event.

The Bottom Line

The out-of-pocket maximum is the single most important financial protection in your health insurance plan. It guarantees that no matter how catastrophic your medical expenses become in a given year, your cost-sharing will not exceed a defined limit. For 2026, that limit is $9,450 for individuals and $18,900 for families under ACA rules, though many plans set their caps significantly lower.

When shopping for health insurance, do not just look at premiums and deductibles. Calculate the worst-case scenario: 12 months of premiums plus the out-of-pocket maximum. That number tells you the absolute most you could spend on healthcare in a year. Compare that figure across plans, and you will have a much clearer picture of which plan truly offers the best value for your situation.

Keep all your care in-network, track your out-of-pocket accumulator throughout the year, and if you know you will face significant medical expenses, consider stacking procedures in the same plan year to take full advantage of 100 percent coverage after hitting the maximum. The more strategically you use this feature of your health plan, the more money you will save when you need it most.