DEFINITION: Out-of-pocket costs refer to the portion of your covered medical expenses that you can expect to pay during the course of a plan year. Your out-of-pocket costs can include a combination of your health plan’s deductible, copays, and coinsurance. If you receive medical care that’s not covered by your health plan, you’ll have to pay the full cost of the treatment, but it won’t count towards your policy’s out-of-pocket limit (an example would be the cost of dental care, assuming your plan does not include dental coverage).
One of the Affordable Care Act’s notable improvement for consumers was limits on out-of-pocket costs. For 2016, the maximum out-of-pocket for an individual is $6,850. (For a family, it’s $13,700.) For 2017, the maximum out-of-pocket is increasing to $7,150. (For a family, it will be $14,300.) But health plans can cap out-of-pocket spending at lower levels, and the ACA’s cost-sharing subsidies also result in lower out-of-pocket limits for eligible enrollees.
The monthly premiums you pay in order to have coverage are not included in out-of-pocket costs. Out-of-pocket costs are only incurred if and when you need medical care, whereas premiums have to be paid every month, regardless of whether you need medical care or not.
Under the ACA, family plans can have total out-of-pocket limits that are double the individual out-of pocket limit, but no individual can be expected to pay more in out-of-pocket costs than the individual limit, even if he or she is covered under a family plan. (This is a new rule that was implemented in 2016.)
If you use out-of-network providers, your out-of-pocket costs can be considerably higher than the limits stated above. On some plans, they’re double the in-network limits, but on other plans, out-of-pocket costs can be unlimited if patients receive care from doctors or hospitals that aren’t in the health plan’s network.