Your health insurance plan has a lot of confusing terms. One of the major questions we get asked about is the difference between your deductible vs maximum out of pocket. Depending on the plan, these policy benefits may have different definitions. We recommend verifying this information with your plan’s summary of benefits.
This article discusses the basic definition differences between a deductible vs maximum out of pocket. Furthermore, this article specifically discusses the rule differences between Affordable Care Act plans and Medicare Advantage plans.
There are a few basic differences between your deductible vs maximum out of pocket. In basic terms, a deductible is a prerequisite requirement you need to spend first before the insurance company starts paying the claim. A deductible is an accumulation of out of pocket claims that are not copays. On some plans, you will have an in-network deductible and an out-of-network deductible. It is important to understand which benefits are subject to your deductible and which benefits accumulate towards your deductible. Also, plans will include multiple deductibles if you have multiple family members enrolled in the same policy.
Keep in mind – you may have multiple deductibles on your plan while in-network. For example, you may have a prescription deductible and a separate medical deductible.
You usually receive a coinsurance or copay benefit after your deductible.
Maximum Out of Pocket
The maximum out of pocket on your plan is the total amount of money you will spend before receiving 100% coverage from the insurance company for the rest of the plan year. Also, you will have multiple maximum out of pockets if you have multiple family members enrolled.
You may also have an in-network maximum out of pocket and an out-of-network maximum out of pocket on some plans. Be careful – an out-of-network maximum out of pocket does not give you 100%. Out-of-network claims can still be billed to you, even if you have satisfied your out-of-network maximum out of pocket. These situations are known as balance bills (or surprise bills).
Affordable Care Act Plans
The Affordable Care Act (“ACA”) was implemented on January 1st, 2014. The rules drastically changed for health insurance plans in 2014. One of the major rule changes is that there are no more lifetime maximums on health insurance plans that are ACA compliant. This means that once you satisfy your in-network maximum out of pocket in a plan year, you will receive 100% in-network coverage for the rest of the plan year. This includes 100% coverage towards in-network deductibles, copays, coinsurance and prescriptions.
Medicare Advantage Plans
Part C Medicare Advantage Plans have similar rules to Affordable Care Act plans, except for one difference: prescriptions. In the world of Medicare, prescriptions do not accumulate towards your maximum out of pocket. This includes standalone Part D drug plans as well as Part C Medicare Advantage Plans. Your prescription coverage does not have a maximum out of coverage. Each plan has different benefits, but your Medicare plan will always have a donut hole. To learn more about the donut hole, click here.