{"id":11196,"date":"2020-05-07T11:40:10","date_gmt":"2020-05-07T15:40:10","guid":{"rendered":"https:\/\/www.singlecare.com\/blog\/?p=11196"},"modified":"2026-04-03T18:09:29","modified_gmt":"2026-04-03T22:09:29","slug":"deductible-vs-out-of-pocket-maximum","status":"publish","type":"post","link":"https:\/\/www.singlecare.com\/blog\/deductible-vs-out-of-pocket-maximum\/","title":{"rendered":"What\u2019s the difference between a deductible and an out-of-pocket maximum?"},"content":{"rendered":"

You just received a medical procedure and see the bill: You owe money. But don\u2019t you pay a monthly premium for health insurance so you don\u2019t have to pay medical bills? Not necessarily.\u00a0<\/span><\/p>\n

Each year, many people with health insurance must spend a certain amount out of pocket for eligible medical services before their insurance plan begins paying for anything. Once they reach that dollar amount, called a deductible, the health insurance company shares the costs with the policyholder until they reach their out-of-pocket maximum, a.k.a. the total amount they must spend for the insurance to cover all remaining eligible healthcare costs. Read on to understand the differences between the two.<\/span><\/p>\n

What is a health insurance deductible?<\/span><\/h2>\n

An annual <\/span>deductible<\/span><\/a> is the amount of money you must spend on covered healthcare services before your health insurance plan begins to share any costs. This is in addition to the monthly premium to be enrolled in the plan. Typically, higher premiums translate to lower deductibles, while lower premiums tend to mean a higher deductible. Most insurance plans have a deductible, including individual insurance, employer insurance, and Medicare. Some health insurance plans have a low deductible or no deductible at all.<\/span><\/p>\n

What is an out-of-pocket maximum?<\/span><\/h2>\n

An annual <\/span>out-of-pocket maximum<\/span><\/a> is the limit the policyholder will have to pay for healthcare services, not including the plan premium. After the policyholder reaches that amount\u2014which the deductible and <\/span>copays<\/span><\/a> contribute to\u2014the insurance plan will cover all further eligible healthcare expenses for that year.<\/span><\/p>\n

Deductible vs. out-of-pocket maximum<\/span><\/h2>\n

A deductible is the cost a policyholder pays on health care before their insurance starts covering any expenses. In contrast, an out-of-pocket maximum is the amount a policyholder must spend on eligible healthcare expenses through copays, coinsurance, or deductibles before their insurance becomes responsible for paying 100% of covered expenses with no further policyholder cost sharing. Because of this, a policyholder\u2019s deductible will always be lower than the out-of-pocket maximum.<\/span><\/p>\n

“For example, a person might have a $2,000 deductible and a $5,000 maximum out-of-pocket,” says <\/span>David Belk<\/span><\/a>, MD, the author of <\/span>True Cost of Health Care<\/span><\/i>. “They might get $10,000 worth of medical care for, say, a hospitalization, surgery, and post-operative care. The first $2,000 is paid entirely by the patient. After that, the patient might have to pay either a fixed copay\u2014$20, $50, $100, determined in advance by the insurance company and depending on the service\u2014or a percentage of the total payment for each covered service, which is a coinsurance.\u201d<\/span><\/p>\n

“Once the total of that person’s copays and coinsurances plus their deductible has totaled $5,000, they owe no more money that year for any of their medical care because their insurance will cover all further costs,” he explains.<\/span><\/p>\n

How high can out-of-pocket maximums reach in 2026?<\/span><\/h2>\n

Although deductibles and out-of-pocket maximums vary by plan, all plans that meet Affordable Care Act (ACA) standards set a yearly limit on how high out-of-pocket maximums can go. This year, the IRS defines <\/span>high-deductible health plans<\/span><\/a> as those having a deductible of at least $1,700 for individuals or $3,400 for families. For 2026, <\/span>out-of-pocket maximums<\/span><\/a> cannot surpass $10,600 for an individual and $21,200 for a family plan. Costs incurred for out-of-network healthcare services do not count toward these figures.<\/span><\/p>\n

Does the deductible apply to the out-of-pocket maximum?<\/span><\/h2>\n

First, it’s important to understand how to meet your deductible. Preventive care services like annual checkups are often provided without an additional consumer cost via health plans and, therefore, don’t contribute toward meeting your deductible. Although it varies by plan, prescription drugs might count toward a separate prescription benefit deductible. Costs of hospitalization, surgery, lab tests, scans, and some medical devices usually count toward deductibles.<\/span><\/p>\n

In-network, out-of-pocket expenses used to meet your deductible also apply toward the out-of-pocket maximum.<\/span><\/p>\n

The monthly premium does not count toward either the deductible or out-of-pocket maximum, meaning that even if you reach your out-of-pocket maximum, you\u2019ll still have to continue paying the monthly cost of your health plan to continue receiving coverage from your insurance company.\u00a0<\/span><\/p>\n

Services received from out-of-network providers may also not count toward the out-of-pocket maximum, nor do some non-covered treatments and medications. Once the out-of-pocket maximum is met, policyholders should not have to pay any costs\u2014whether that’s copayments or coinsurance\u2014for any and all covered in-network medical care.<\/span><\/p>\n\n\n\n\n\n\n\n
\u00a0 \u00a0Deductible vs. out-of-pocket maximum: What counts?<\/span><\/th>\n<\/tr>\n<\/thead>\n
<\/td>\nCounts<\/span><\/td>\nDoes not count<\/span><\/td>\n<\/tr>\n
Deductible<\/strong><\/td>\n\n
    \n
  • Hospitalization<\/span><\/li>\n
  • Surgery<\/span><\/li>\n
  • Lab tests<\/span><\/li>\n
  • Scans<\/span><\/li>\n
  • Some medical devices<\/span><\/li>\n
  • Prescriptions\u2014although, in many instances, they might count toward a separate prescription deductible<\/span><\/li>\n<\/ul>\n<\/td>\n
\n
    \n
  • Out-of-network services (usually)<\/span><\/li>\n
  • Monthly premiums<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n
Out-of-pocket limit<\/strong><\/td>\n\n
    \n
  • All out-of-pocket expenses spent to meet the deductible<\/span><\/li>\n
  • Copays<\/span><\/li>\n<\/ul>\n<\/td>\n
\n