Deductible vs. Out-of-Pocket Maximum

A deductible is the amount you pay out of pocket for covered health care before your health insurance starts covering some costs. An out-of-pocket maximum is the highest amount you’ll have to spend on covered care in a year; once you reach it, insurance covers 100% of your covered costs.

Both limits are important to consider along with other out-of-pocket costs for health insurance, including copays and coinsurance.

Here’s how they work.

What is a deductible?

A deductible is how much you pay for approved medical services before your insurance starts covering care. After you reach your deductible, you’re only responsible for a percentage of the cost of services (called coinsurance) or copays for services (flat fees), depending on your policy. Your deductible resets each year.

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What is an out-of-pocket maximum?

The out-of-pocket maximum is the most you’d have to spend on in-network services in a year. Once you spend this much out of pocket, your insurance covers 100% of covered benefits for the rest of the year. Your out-of-pocket max resets each year.

Which medical costs count toward your deductible and out-of-pocket maximum depend on your health plan, so it’s important to read your policy summary. Depending on your plan, any one of the following scenarios may apply to you:

• Copays usually don't count toward your deductible.

• You typically won’t pay coinsurance until after you hit your deductible.

• In some policies, you may have to pay in full for all medical services up to your deductible amount.

• Your insurer may need to authorize in advance a diagnostic exam or imaging exams like MRIs or X-rays. If you don’t get authorization, the insurer might deny the charges and what you pay will not count toward your spending limits.

If you have a high-deductible health plan, your deductible may be as high as your out-of-pocket maximum, and you may be eligible for a health savings account (HSA).

Limits on how much you spend

It’s important to note that not all plans have deductibles, but all plans do have out-of-pocket maximums, which is a requirement of the Affordable Care Act.

The Affordable Care Act also requires the federal government to set limits on out-of-pocket maximums that apply to every health plan sold in America. There are different out-of-pocket maximums for individuals and family plans that have two or more members. In 2025, your out-of-pocket maximum can be no more than:

• $9,200 for an individual plan.

• $18,400 for a family plan.

Individual limits apply to everyone with coverage, even those who are part of a family plan. For example, if you have three people on a family plan, the total the family spends on medical costs out of pocket cannot exceed $18,400. But if one person on the plan incurs covered costs amounting to $9,200, the plan must then cover all additional costs for that individual even if the family limit hasn’t been reached.

Optimize your deductible and out-of-pocket maximum

Those limits are high and would be hard for most Americans to pay. You’re more likely to meet your deductible and out-of-pocket maximum if you have a chronic condition or need several prescription drugs or other expensive care. If that sounds familiar, these guidelines can help you save on your care:

• Stay in your plan's provider network when possible.

  Only in-network services count toward your deductible and out-of-pocket maximum in most plans.

• Know what your plan covers.

  If any medical need, from a brand-name medication to outpatient surgery, isn’t covered by your policy, the money you spend on it isn’t going to count toward your deductible or out-of-pocket max.

• Check prior authorization requirements

  before getting any care besides a primary physician visit, such as an imaging exam or specialist visit. If you do, the doctor referring you for that care should obtain the authorization on your behalf.

• Plan your medical expenses

  whenever possible, such as when you’re having a scheduled surgery or an imaging procedure. Once you’ve hit your deductible, costs are lower for additional procedures, and once you’ve hit your out-of-pocket max, any additional covered procedures are covered at 100%.

• Use free preventive care services

  as outlined in your policy. Getting preventive care now can lower costs later by catching and treating a health problem before it gets out of hand.

Ultimately, choosing health care is a financial decision just like everything else you pay for. Learning about health insurance before your bills come can save you a lot of money over time.