out-of-pocket maximum

An out-of-pocket maximum is a predetermined, limited amount of money that an individual must pay before an insurance company or (self-insured health plan) will pay 100% of an individual’s covered, in-network health care expenses for the remainder of the year.

Health insurance plans can set their own out-of-pocket maximums, but they’re constrained by federal regulations that impose an upper limit on how high out-of-pocket costs can be.

In 2023, the upper limits are $9,100 for an individual, and $18,200 for multiple family members on the same plan. These limits will increase to $9,450 and $18,900, respectively, in 2024, but will decrease to $9,200 and $18,400, respectively, in 2025.¹

It’s important to note that the allowable out-of-pocket limits for HSA-qualified high-deductible health plans (HDHPs) are lower, at $7,500 for an individual and $15,000 for a family in 2023. For 2024, the HDHP out-of-pocket limits are $8,050 for an individual and $16,100 for a family.²

Out-of-pocket caps apply to in-network care that’s considered an essential health benefit, and only to plans that are not grandfathered or grandmothered or exempt from ACA regulations, as those plans do not have restrictions on their out-of-pocket exposure.

The out-of-pocket limit applies to all other types of private (non-Medicare/Medicaid) health insurance, including individual, small group, large group, and self-insured health plans. 

The federal government publishes new guidelines each year that include the highest out-of-pocket maximum that health plans can impose.

(Through 2022, this was published in the annual benefit and payment parameter notice; for 2023 and future years, it’s published in guidance that HHS issues no later than January of the prior year; the guidance for 2025 was issued in November 2023.³)

So the highest allowable out-of-pocket maximum changes annually. In 2014, it was just $6,350 for an individual, but by 2024, it will have increased by nearly 49%. Many health plans, however, have out-of-pocket maximums that are well below the highest allowable amounts.

For 2020 and 2021, HHS changed the formula to also include the growth of individual market health insurance premiums since 2013, but switched back to only using employer-sponsored insurance as of 2022.⁴

So for 2025, HHS looked at how much average employer-sponsored premiums in 2024 ($7,110) exceed average employer-sponsored premiums in 2013 ($4,897). The growth amounted to 45.2%. So that means the maximum out-of-pocket for 2025 is 45.2% higher than the maximum out-of-pocket in 2014. That works out to $9,220, and they round down to the nearest $50, for a 2025 maximum out-of-pocket of $9,200.³