An out-of-pocket maximum is a predetermined, limited amount of money that an individual must pay before an insurance company or (self-insured employer) will pay 100% of an individual’s covered 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 2021, the upper limit is $8,550 for an individual and $17,100 for a family. For 2022, they will increase slightly, to $8,700 for an individual and $17,400 for a family (these 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 federal government publishes new guidelines each year that include the highest out-of-pocket maximum that health plans can impose (published in the annual benefit and payment parameter notice). So the highest allowable out-of-pocket maximum changes annually. In 2014, it was just $6,300 for an individual, but by 2022, it will have increased by more than 38%. Many health plans, however, have out-of-pocket maximums that are well below the highest allowable amounts.
For perspective, here are the federally allowed maximum out-of-pocket amounts since they debuted:
- 2014: $6,350 for an individual; $12,700 for a family
- 2015: $6,600 for an individual; $13,200 for a family.
- 2016: $6,850 for an individual; $13,700 for a family (there was also a requirement starting in 2016 that individual maximum out-of-pocket limits be embedded in family plans).
- 2017: $7,150 for an individual; $14,300 for a family.
- 2018: $7,350 for an individual; $14,700 for a family.
- 2019: $7,900 for an individual; $15,800 for a family
- 2020: $8,150 for an individual; $16,300 for a family.
- 2021: 8,550 for an individual; $17,100 for a family.
- 2022: $8,700 for an individual; $17,400 for a family (note that these are lower than initially proposed; CMS explains the details here)
If you have Medicare coverage, be aware that there is no out-of-pocket maximum for Original Medicare, which is why most enrollees have supplemental coverage (from an employer-sponsored plan, Medigap, or Medicaid). Medicare Advantage plans must cap out-of-pocket costs at no more than $7,550 as of 2021, but that does not include out-of-pocket costs for prescription drugs covered by the Part D coverage that’s integrated with most Advantage plans.