How does a Deductible and an Out-of-Pocket Maximum Work?

When an individual or family enrolls in healthcare they are often bombarded by insurance jargon that isn’t the easiest to understand. The health insurance world speaks a different language than what most of us are used to. So what exactly is an out of pocket maximum and how does that work with a health plan deductible? An out of pocket maximum is the most you’ll have to pay during a policy period (usually Jan 1st-Dec 31st) for health care services. Once you’ve reached your out-of-pocket maximum, your plan begins to pay 100 percent of the allowed amount for covered services. I emphasize covered services as not all services are covered on health plans. You must make sure you know your services will be covered before they occur as the majority of carriers have pre-authorization on certain services.

Deductible are the amount you will pay out-of-pocket before your co-insurance kicks in and the carrier starts to share in your cost. For example if you sign up for a plan with a $1,000 deductible and a $6,600 out-of pocket maximum, you will pay for medical Money Scaleexpenses until you reach your $1,000 deductible then you share in payment until you reach your $6,600 out-of-pocket maximum. Keep in mind there are always stipulations with each plan as to how much your co-pays and co-insurance pays towards your out-of pocket maximum. Both co-pays and co-insurance applies to your out-of-pocket  maximum, but co-pays do not always apply to your deductible.

This is why it is so important to fully understand the health plan you enroll in, so that you are not surprised by the amount you have to pay when it comes to a health claim. When you enrolled in your plan did you understand exactly what is covered and how it is covered before and after your deductible and out-of-pocket maximum? Look over other health terms on the Department of Labor Website HERE.

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