Out-of-Pocket Maximums Under the Affordable Care Act
The ACA limits out-of-pocket maximums, the max amount of costs for covered services you’ll pay out-of-pocket in a policy period on your health plan.
- In 2018, your out-of-pocket maximum could be no more than $7,350 for an individual plan and $14,700 for a family plan before marketplace subsidies.
NOTE: The individual limit applies to each individual in the plan. Thus, for 2018, even though the family limit is $14,700, no one member can occur more than $7,350 in covered expenses before the maximum is reached for that member.
Out-of-pocket maximums increase a little each year. For example:
- In 2015, your out-of-pocket maximum could be no more than $6,600 for an individual plan and $13,200 for a family plan before marketplace subsidies.
- In 2016, your out-of-pocket maximum could be no more than $6,850 for an individual plan and $13,700 for a family plan before marketplace subsidies.
- In 2017, your out-of-pocket maximum could be no more than $7,150 for an individual plan and $14,300 for a family plan before marketplace subsidies.
Learn more about the proposed 2017 rates, or learn more about out-of-pocket maximums under the ACA below.
What is an Out-of-pocket Maximum?
An out-of-pocket maximum is the total amount you’ll have to pay during a policy period, typically a year, before your health insurance starts to pay 100% for covered essential health benefits.
What Costs Count Toward my Out-of-pocket Maximum
Your costs that contribute to your out-of-pocket maximum limit must include deductibles, coinsurance, copayments, or similar charges and any other expenditure required of an individual which is a qualified medical expense for the essential health benefits. This limit does not have to count premiums, balance billing amounts for non-network providers and other out-of-network cost-sharing, or spending for non-essential health benefits.
Out-of-pocket maximums only apply to covered essential benefits. So if your plan doesn’t cover a service, or the service isn’t an essential benefit it may not count toward your maximum.
Out-of-pocket maximums should not be confused with deductibles (the amount you pay out-of-pocket before coinsurance kicks in). That being said, on some high deductible health plans like catastrophic coverage your maximum will be the same as your deductible.
Maximums and HSAs
Maximum limits are slightly different for HSA compatible plans. HSA plans use the IRS’s formula and non-HSA plans use HHS’s formula. All that means to you is that you have to double check that a high deductible health plan is HSA compatible if you plan to use an HSA.
For 2017, the out-of-pocket maximum limits for a HSA eligible plan are:
- $6,550 for self only coverage (up from $6,350 in 2014 and $6,450 in 2015)
- $13,100 for coverage other than self-only (up from $12,700 in 2014 and $12,900 in 2015)
TIP: Note that they are different than the out-of-pocket maximums. HHS published its 2017 ACA out-of-pocket limits in the Federal Register on March 8, 2016, in its Notice of Benefit and Payment Parameters for 2017 final rule.
For 2018 minimal deductibles needed for an HSA are:
- Self-only: $1,350
- Family: $2,700
For 2017 HSA contribution limits are:
- Self-only: $3,450 (up $50 from 2016)
- Family: $6,900
TIP: For 2018 HSA catch-up contributions for 55-plus are still $1,000. See IRS Sets 2017 HSA Contribution Limits.
Out-of-pocket Maximums and ObamaCare
Before the ACA there was a lot more leeway for insurers to tweak how they treated out-of-pocket maximums. Even though things are a lot simpler now, depending on your plan not all services are going to be covered 100% and not all services are always going to count toward your out-of-pocket maximum. Double check that your health plan isn’t cutting any of the corners found at this great article from about.com.
Out-of-pocket Maximums and Subsidies
Under the ACA if you make less than 250% of the Federal Poverty Level (FPL) you may qualify for Cost Sharing Reduction Subsidies. These subsidies reduce the out-of-pocket costs you are responsible for and reduce your out-of-pocket maximum as well.
For example let’s look at 2015 numbers to offer an idea of what how these subsidies work. For 2015 subsidies (based on the Second Lowest Cost Silver plan in your marketplace), if your income was:
- 100-200 percent of FPL,
- your out-of-pocket limit won’t be more than $2,250 for an individual.
- your out-of-pocket limit won’t be more than $4,500 for a family.
- 200-250 percent of FPL,
- your out-of-pocket limit won’t be more than $5,200 for an individual.
- your out-of-pocket limit won’t be more than $10,400 for a family.
- More than 250% percent of FPL,
- your out-of-pocket limit won’t be more than $6,600 for an individual.
- your out-of-pocket limit won’t be more than $13,200 for a family.
TIP: The method is the same every year, but the guidelines are adjusted upward slightly each year.
What Are Essential Health Benefits?
In general Essential Health Benefits are the types of care you need to prevent and treat sickness and do not include elective and “non-essential treatments”. All private plans sold on the individual market must cover services from each of the ten following essential health benefit categories.
• Emergency services
• Laboratory services
• Maternity care
• Mental health and substance abuse treatment
• Outpatient, or ambulatory care
• Pediatric care
• Prescription drugs
• Preventive care
• Rehabilitative and rehabilitative (helping
maintain daily functioning) services
• Vision and dental care for children
See our full list of Essential Benefits under the Affordable Care Act with detailed descriptions.