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What is a health insurance “out-of-pocket” limit? Consumer Q&A

By on April 27th, 2012
Filed: Advice, Consumers, Health Insurance, You

Do you know the difference between a deductible and an out-of-pocket limit?

The out-of-pocket limit, sometimes called a “maximum out-of-pocket limit” or “out-of-pocket max,” is the highest amount you could potentially have to pay for covered medical services within a single year. It’s often – but not always – higher than your annual deductible.

Neither deductibles nor out-of-pocket limits include what you pay month-to-month to maintain your coverage. But your out-of-pocket limit will include your deductible as well as any copayments or coinsurance you might be required to pay.

Last week on Yahoo Answers, we found someone confused about deductibles and out-of-pocket limits. The phrasing of the question was a little difficult to decipher, but they seemed to be asking:

If I have a $10,000 deductible and a $10,000 out-of-pocket limit, do I still need to pay the out-of-pocket amount after I’ve met your deductible?

The eHealthInsurance reply was voted Best Answer:

If you have not met your deductible yet and the medical services that were rendered apply toward your deductible (according to the rules of your policy), then yes, you need to pay what is billed to you until you meet your annual deductible.

If your policy has a “$10,000 annual deductible” and a “$10,000 out-of-pocket maximum” AND you’ve already paid your full deductible for the year, then the insurance company should pay for the rest of your covered medical services this year. You do not have to pay an additional $10,000 on top of the $10,000 you already paid.

Deductibles and out-of-pocket limits aren’t always the same, but they’re sometimes the same for plans with high deductibles. Yes, it can get confusing, but I hope that helps.

Image by Flickr user DorkyMum

About Douglas Dalrymple

Doug Dalrymple is a member of the communications team at eHealth, Inc. and has worked in the health insurance and technology industries for fifteen years. He works on communications strategy, content creation and management, project management, and corporate messaging.

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