What are out-of-pocket costs?
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, although they typically only refer to in-network costs for essential health benefits, as there are no regulations in place to cap how much people spend on out-of-network care, and insurers are not required to cover services that aren’t considered essential health benefits.
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 2018, the maximum out-of-pocket for an individual is $7,350. (For a family, it’s $14,700.) For 2019, HHS has finalized an increase in the maximum out-of-pocket to $7,900. For a family, the maximum out-of-pocket cost will be $15,800 in 2019. 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 (and it’s increasingly common to see plans that simply don’t cover out-of-network care at all, unless it’s an emergency situation).