Out of pocket stop loss vs deductible

The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.

The out-of-pocket limit doesn't include:

• Your monthly

  premiums

  The amount you pay for your health insurance every month. In addition to your premium, you usually have to pay other costs for your health care, including a deductible, copayments, and coinsurance. If you have a Marketplace health plan, you may be able to lower your costs with a premium tax credit.

  If you have health insurance, you may have heard of the “out-of-pocket maximum.” Here’s an overview of how it works, including which costs do and don’t count towards it, and what happens after your out-of-pocket maximum is met.

  What is an out-of-pocket maximum?

  Simply put, your out-of-pocket maximum is the most that you’ll have to pay for covered medical services in a given year. Think of it as an annual cap on your health-care costs. Once you reach that limit, the plan covers all costs for covered medical expenses for the rest of the year.

  Depending on your plan, “covered services” and the amount of your out-of-pocket maximum will vary. However, by law, the out-of-pocket limit for Marketplace plans can’t be above a set limit each year. For the 2021 plan year, the out-of-pocket cap for Marketplace plans can’t exceed $8,550 for individuals or $17,100 for families.

  Not every plan has an out-of-pocket max, so if this is a benefit you’re interested in, be sure to read plan details carefully. If you’d like, an eHealth licensed insurance agent can walk you through your coverage options and help you find plans that include this benefit.

  Benefits of an out-of-pocket maximum

  First, it is important to understand why you want to have a maximum out-of-pocket on your health insurance plan. This is important because it means that there is a maximum amount of money that you have to pay out of your own pocket. If you hit this number, that means that your health insurance company will be responsible for covering all of your other expenses. You should always take a look at your plan to see if there is a maximum you will ever have to pay out-of-pocket.

  What costs go towards meeting the out of pocket maximum?

  Even with health coverage, you’ll still have out-of-pocket costs. Not all costs count towards your out-of-pocket maximum, but most cost-sharing expenses do. Cost sharing is what you pay out of pocket for covered medical services and prescriptions.

  Below are some costs that are included in most health insurance plans:

  • Deductible: Your deductible is the amount you must spend first on eligible medical costs before insurance kicks in and starts paying its share. Generally, any costs that go towards meeting your deductible also go towards your out-of-pocket maximum.
  • Coinsurance: This is a percentage amount you may owe for covered medical services and prescriptions after you’ve met your deductible. So, for example, if your coinsurance is 20%, you’ll pay 20% of the total medical bill, and your health plan will pay 80%.
  • Copayment: unlike coinsurance, this is a flat rate you may pay for covered medical care, usually at the time that you get the service. When you visit the doctor, your plan may have a set copayment amount, such as a $40 copayment for office visits, that you pay at the time of the visit.

  What costs don’t count towards meeting the out-of-pocket maximum?

  Not all of your costs go towards your annual cap, and it’s important to know which ones don’t count. Costs that don’t count towards your out-of-pocket maximum include:

  • Premiums: monthly plan premiums don’t go towards your maximum out-of-pocket costs. Even after you’ve met your out-of-pocket maximum, you’ll keep paying your monthly premium unless you cancel your plan.
  • Non-covered services: medical services that aren’t covered won’t count towards your out-of-pocket maximum. This might include out-of-network services if your plan requires you to use network providers. You’ll most likely have to pay for these costs out of pocket.
  • Balance billing: if your provider charges above the allowed amount your insurance will cover, you may have to pay the difference.

  Do I have a copayment after out of pocket maximum?

  This is a common question that comes up, but it’s easy to answer if you know the technical definitions for both of these health insurance terms. A copayment is an out of pocket payment that you make towards typical medical costs like doctor’s office visits or an emergency room visit. An out of pocket maximum is the set amount of money you will have to pay in a year on covered medical costs. In most plans, there is no copayment for covered medical services after you have met your out of pocket maximum. All plans are different though, so make sure to pay attention to plan details when buying a plan. If you’ve already bought a plan, you can look at your copayment details and make sure that you’ll have no copayment to pay after you’ve met your out of pocket maximum.

  In most cases, though, after you’ve met the set limit for out of pocket costs, insurance will be paying for 100% of covered medical expenses.

  What happens after my out-of-pocket maximum is met?

  You may wonder if you’ll still have cost sharing, such as copayments, after you’ve met your out-of-pocket maximum.

  As mentioned, you may owe copayments or coinsurance for covered medical services, and these types of cost sharing expenses count towards your out-of-pocket cap. Once you’ve reached your yearly limit, your insurance generally pays 100% of covered medical expenses. So, you won’t owe further cost sharing for the rest of the year.

  What’s the difference between a deductible vs. out-of-pocket limit?

  As mentioned earlier, your deductible is the amount you pay for covered services before your benefits kick in. In other words, before you’ve met your plan’s deductible, you pay 100% for covered medical costs.

  This deductible amount may vary from plan to plan, and not all plans have one. Once you’ve met your deductible, your plan starts to pay its share of costs. Then, instead of paying the full cost for services, you’ll usually pay a copayment or coinsurance for medical care and prescriptions.

  Your deductible is part of your out-of-pocket costs and counts towards meeting your yearly limit. In contrast, your out-of-pocket limit is the maximum amount you’ll pay for covered medical care, and costs like deductibles, copayments, and coinsurance all go towards reaching it.

  If you have more questions on the difference between deductibles versus out-of-pocket limits, an eHealth licensed insurance agent would be happy to help. Our trusted agents can also offer advice on how to lower your out-of-pocket costs by comparing coverage choices.

  Should I find a plan with a low out-of-pocket maximum?

  Given how out-of-pocket maximums work, it might seem like a good idea to find the plan with the lowest yearly limit. But the answer isn’t so simple.

  For some people, it makes sense to find a plan with a low deductible and out-of-pocket maximum. They’ll quickly meet those amounts and insurance will cover almost all of their remaining medical costs for the year. If you have high medical costs and a good sense of how much you spend every year, this route might work for you.

  But if you’re someone who doesn’t expect to spend thousands of dollars on medical expenses early on in the year, you might not meet your out-of-pocket maximum, regardless of whether it’s low or high.

  Oftentimes, plans with low deductibles and out-of-pocket costs are offset by higher premiums. So if you don’t expect to meet your out-of-pocket maximum before the end of the year, it might be more affordable for you to go for a plan with a lower premium. There may be many factors to consider, which is why it might be helpful to speak with an eHealth licensed insurance agent who can discuss your options and find a plan that fits your situation.

  How do I find a plan that’s right for me?

  Finding a plan that works for you will come down to understanding your priorities, budget, and medical needs. If you need help exploring individual and family health plan options, eHealth’s licensed insurance agents can offer their expertise. Simply give us a call to get personalized assistance today – or start browsing at your own convenience using the plan finder tool.

  Each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works.  This article is only for general education.

  Is out

  Essentially, a deductible is the cost a policyholder pays on health care before their insurance starts covering any expenses, whereas an out-of-pocket maximum is the amount a policyholder must spend on eligible healthcare expenses through copays, coinsurance, or deductibles before their insurance starts covering all ...

  Is it better to have a higher deductible or higher out

  Typically, plans with low deductibles and out-of-pocket limits will also have higher premiums. These plans might make sense if you anticipate needing lots of care. On the other hand, if you don't consume much health care, choosing a higher deductible/out-of-pocket limit could lower your overall costs.