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Understanding the difference between your health insurance out of pocket expenses and your policy's deductible.
In a health insurance plan, the deductible is the amount of money you need to pay out-of-pocket before your health insurance starts covering health care services. The out-of-pocket limit, on the other hand, is the maximum amount you'll spend out of pocket in a given calendar year.
Once you meet your deductible, you typically split costs with your health insurance company using either a copay or a coinsurance percentage. The money you spend on copayments or coinsurance count towards your out-pocket-limit, as does your deductible. Monthly premiums do not count towards your deductible or your out-of-pocket limit.
Once you meet your out-of-pocket limit, your health insurance company will pay for 100% of your health care services. You will still need to pay your monthly premium.
Health insurance plans with lower monthly premiums tend to have higher deductibles and higher out-of-pocket limits and vice versa. There is a federal maximum out-of-pocket limit. For 2019, the maximum limit is $7,900 for individual plans and $15,800 for family plans.
Some plans, known as catastrophic health insurance plans, have a deductible that is the same as the out-of-pocket limit. These plans are only available to people under 30 and people with a hardship exemption. Catastrophic plans are designed to cover you in the event of very expensive accidents or if you are diagnosed with a medical condition that requires a lot of care.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.