An out-of-pocket maximum is the most you can be required to pay for covered, in-network care during a plan year. Once your deductible, copays and coinsurance add up to that figure, your plan generally pays 100% of covered in-network services for the rest of the year. Your monthly premium does not count toward it.
It is the single number that tells you how bad a very bad year could get, which makes it just as important as the deductible when you compare plans. Here is how the limit works, what counts, what does not, and how to use it when you choose coverage.
Key Takeaways
- For 2026 plans, the federal cap on the out-of-pocket maximum is $10,600 for one person and $21,200 for a family. For 2027 it rises to $12,000 and $24,000.
- Premiums, balance bills from out-of-network providers, and services your plan does not cover do not count toward the limit.
- Individuals in a family plan have their own lower limit, so one sick person cannot be asked to pay the whole family maximum.
- Your plan may set a limit lower than the federal ceiling. Always check your own Summary of Benefits and Coverage.
- A low premium plan with a high maximum can cost more in a hard year than a pricier plan with a low one.
How the Out-of-Pocket Maximum Works
Three kinds of cost sharing feed into the limit. The deductible is what you pay before the plan starts sharing costs. Copayments are flat fees, like $30 for a primary-care visit. Coinsurance is a percentage of the bill, like 20% of an imaging scan. Everything you pay in these categories for covered in-network care counts toward the maximum.
Once the total reaches the limit, the insurer picks up the remaining covered in-network costs until the plan year resets. The reset date is often January 1, but some plans, especially job-based ones, run on a different calendar. If you change plans mid-year, your progress toward the maximum usually starts over.
The ACA ceiling
The Affordable Care Act sets a yearly upper limit on cost sharing for essential health benefits in non-grandfathered plans. It is adjusted annually.
| Plan year | Individual limit | Family limit |
|---|---|---|
| 2026 | $10,600 | $21,200 |
| 2027 | $12,000 | $24,000 |
These are ceilings, not typical prices. Many employer and marketplace plans set a lower number, and cost-sharing reductions can shrink it further for people with moderate incomes. For high-deductible plans linked to health savings accounts, separate IRS limits also apply, and those figures can differ from the ACA ones. See our look at high-deductible plan pros and cons for details.
What Counts Toward Your Maximum
- Your annual deductible for covered services.
- Copays for visits, tests, prescriptions and emergency care, if your plan counts drug costs under the same limit.
- Coinsurance for covered hospital stays, surgery and specialist care.
- Covered out-of-network emergency care, which the plan must generally treat as in-network for cost sharing.
What Does Not Count
This list causes most of the confusion and many of the surprises.
- Monthly premiums. You owe these whether or not you use care.
- Out-of-network costs for non-emergency care. Many plans have a separate and higher limit for this, or none at all.
- Balance billing. A provider outside your network may bill the difference between its charge and what your plan allows. That amount is not part of your maximum, although federal protections now limit this in emergencies and in certain situations at in-network facilities. Our guide to surprise medical bills explains your rights.
- Services your plan excludes. If a treatment is not covered, you pay for it in full and it does not count.
- Penalties for skipping prior authorization, in plans that charge them.
Some plans treat prescription drugs separately, with their own maximum. If you take expensive medicines, read the formulary details, and see how to lower prescription drug costs for ways to reduce what you pay.
A Year-Long Example
All amounts here are made up for illustration. Say Jordan has a plan with a $3,000 deductible, 20% coinsurance, and a $7,000 out-of-pocket maximum.
In March, Jordan breaks an ankle. The covered, in-network bill is $14,000. Jordan pays the $3,000 deductible, then 20% of the remaining $11,000, which is $2,200. Total so far: $5,200.
In September, Jordan needs surgery with an allowed charge of $20,000. Without a maximum, 20% would be $4,000. But Jordan has only $1,800 left before reaching $7,000, so that is all Jordan pays. The plan covers the remaining $18,200.
For the rest of the year, covered in-network care costs Jordan nothing beyond premiums. In January, the clock resets and Jordan starts again at $0.
Individual vs. Family Limits
Family plans can have two different structures, and the difference matters.
| Design | How it works | What it means |
|---|---|---|
| Embedded | Each person has an individual maximum inside the larger family one | One member’s care stops costing money once they hit the individual limit |
| Aggregate | The whole family limit must be met before the plan pays in full | Rarely used for ACA-compliant plans because of the individual cap |
The ACA requires that no single person in a family plan can be asked to pay more than the individual limit, even when the family maximum is higher. That rule applies to non-grandfathered plans. If you are enrolling a family, confirm the structure in the plan documents before you rely on it.
Choosing a Plan With the Maximum in Mind
Many shoppers compare premiums and deductibles but overlook the maximum. A smarter approach is to estimate the best, typical and worst year for each plan.
- Best year: you only pay premiums. The lowest-premium plan wins.
- Typical year: add premiums, expected visit copays, and the cost of your regular medicines.
- Worst year: add premiums plus the out-of-pocket maximum. This is your true ceiling.
A plan with a $450 monthly premium and a $4,000 maximum has a worst-year cost of $9,400 ($5,400 in premiums plus $4,000). A plan with a $330 premium and a $10,000 maximum comes to $13,960 ($3,960 plus $10,000). If you can only handle a limited surprise, the first plan offers better protection. If you are healthy and have savings set aside for emergencies, the second might make sense.
Some people open a health savings account to prepare for the worst-case amount. Compare your options in HSA vs FSA: which health account saves more.
Planning for the Number Before It Arrives
Knowing the ceiling is useful only if you can pay it. Households that have never faced a large bill often discover the gap between a “maximum” and the cash in their checking account at the worst moment. A few habits can narrow that gap.
- Build a medical buffer. Even a few hundred dollars set aside monthly adds up. Aim for at least your deductible, and work toward the full maximum over time.
- Ask for payment plans. Hospitals commonly offer interest-free installment arrangements, and many have financial assistance programs for people whose income falls below set levels. Ask the billing office before paying with a credit card.
- Stay in network. Confirm that the facility, surgeon, anesthesiologist and lab are all in network before a planned procedure. A single out-of-network provider can add costs that never count toward your limit.
- Check authorization rules. If your plan needs approval first, get it in writing before scheduled care.
- Track your progress. Your insurer’s portal usually shows how much of the deductible and maximum you have met, which helps you time elective care.
Timing and Mid-Year Changes
People who expect an expensive year sometimes plan elective care around the reset date. If you have already reached your maximum in November, scheduling a covered, medically appropriate procedure before December 31 may cost you far less than waiting until January, when you would start at zero. This is a legitimate planning approach, but it should always be guided by your doctor’s advice rather than by the calendar alone.
Changing plans mid-year is where progress can disappear. A new job with new insurance usually means a new deductible and a new maximum, even if you had nearly met the old one. Some employer plans credit what you have already paid when a plan is switched inside the same company, but you should confirm that in writing instead of assuming it. Special enrollment periods let you change marketplace plans after certain life events, though your accumulated costs generally do not follow you to the new insurer.
Related Features: Deductibles and Copays Revisited
A deductible and a maximum are related but not identical. A lower deductible means cost sharing begins sooner, though it does not always mean a lower maximum. Some plans skip the deductible for common services such as primary-care visits and generic drugs, so you pay a copay from day one.
It is also worth knowing how the amount you owe is calculated. Insurers apply cost sharing to the negotiated rate, not to the provider’s list price. That is one reason a bill can look enormous while your share is far smaller. Look at your Explanation of Benefits to see what counted. If a payment was applied wrongly, the process for challenging it is covered in how to appeal a denied claim.
Medicare Has Its Own Rules
The ACA ceiling applies to private insurance, not to Original Medicare, which has no annual limit on what you pay for Part A and Part B services. Medicare Advantage plans, however, must include a yearly cap. For 2026 the maximum allowed for in-network services is $9,250, and many plans set theirs lower. Prescription drugs under Part D have a separate $2,100 annual cap in 2026. Our explainer on Medicare Advantage vs Original Medicare compares how these protections differ.
Frequently Asked Questions
Does the out-of-pocket maximum include my premium?
No. Premiums are a separate cost and never count toward the limit.
Is the deductible part of the out-of-pocket maximum?
Yes. Deductible payments for covered in-network services count toward it.
What happens after I reach the maximum?
The plan pays 100% of covered in-network services until the plan year ends. You still owe premiums and costs for anything not covered.
Does it reset every year?
Yes. It starts over at the beginning of each plan year, which may not be January 1.
Do out-of-network bills count?
Often they do not, or they count toward a separate, higher limit. Emergency care is an important exception with special protections.
Why is my family maximum less than twice the individual limit?
Family limits are usually double the individual amount. Each person is also protected by the individual cap, so one member cannot owe the full family number.
Do Medicare supplement plans have one?
Medigap policies generally do not work that way. Most standard plans pay many Medicare cost-sharing amounts directly, while Plans K and L include annual out-of-pocket limits of their own.
How can I find mine?
Look at the Summary of Benefits and Coverage, your insurer’s online portal or the back of your member materials, or call the number on your card.
Bottom Line
The out-of-pocket maximum is your safety net, and its size is as important as the premium when you choose a plan. Know what counts, expect that premiums and out-of-network bills do not, and compare worst-year totals before you enroll. Check your plan documents for the exact number that applies to you.
This article is for general informational purposes only and does not constitute medical, legal, or financial advice. Coverage rules, costs and guidelines change and vary by plan and state — consult a licensed healthcare professional or your insurer for guidance specific to your situation.
