Do you still pay copay after out of pocket maximum

Plans that meet Affordable Care Act (ACA) standards are required to have out-of-pocket maximums. As the health insurance industry changes, there could be non-ACA plans that do not meet the same standards.

What’s the difference between an individual and family out-of-pocket maximum?

Health plans that cover more than one person on a plan often have individual out-of-pocket maximums, as well as a family out-of-pocket maximum.

• Individual out-of-pocket maximum: If someone on the plan reaches their individual out-of-pocket maximum, the plan starts paying 100% of their covered care for the rest of the plan year. Any expenses individuals pay also go toward meeting the family out-of-pocket maximum.
• Family out-of-pocket maximum: Out-of-pocket costs for each individual go toward meeting the family out-of-pocket maximum. This may include costs for deductibles, coinsurance, and copays. If the family out-of-pocket maximum is met, the plan takes over paying 100% of everyone’s covered costs for the rest of the plan year.

If you buy a plan on your own and not through an employer, there are set limits for these out-of-pocket maximums. This is part of the Affordable Care Act.**

Do most people meet their out-of-pocket maximum?

How you use your health plan and what you need coverage for both matter when it comes to meeting your out-of-pocket maximum:

• If you’re generally healthy and only get your annual check-up, you may not even meet your deductible. Your health plan pays for most preventive care, so you’d have few costs.
• If you need a lot of medical care that’s not routine then your medical bills could add up. In this case, it’s possible you could reach your out-of-pocket maximum.

The out-of-pocket maximum is the most you’ll pay in a plan year before your plan starts covering your care. It’s important to understand how an out-of-pocket maximum works with the rest of your health plan, including thedeductible, coinsurance, and copay. When choosing a health plan, make sure you consider all these factors, as well as your expected health needs.

If you reach your health insurance out-of-pocket maximum every year, you may have opportunities to save money. Coinsurance expenses can be prohibitive if you:

• Are on an expensive medication
• Require frequent infusions
• Need recurring costly treatments

But, your high healthcare expenses are the key to two savings opportunities.

1. You may be able to save on your out-of-pocket expenses like copays, coinsurance, and deductibles.
2. You may be able to save on health insurance premiums. 

But the savings techniques we'll discuss here only work for people who expect to reach their plan’s out-of-pocket maximum each year. If you're not typically meeting your plan's out-of-pocket maximum, you'll want to consider other strategies for maximizing your health insurance benefits.

Choose a Plan With a Lower Out-of-Pocket Limit

Health insurance companies pay 100% of your covered in-network expenses for the rest of the year after you meet your yearly out-of-pocket maximum (note that this is not applicable to Original Medicare, which does not have an out-of-pocket maximum; we're referring here to private major medical health plans). 

The only thing you continue to pay after meeting your out-of-pocket maximum is your monthly health insurance premium, and the charges for any services that simply aren't covered by your plan (things like adult dental care, for example, or non-restorative cosmetic surgery).

Therefore, if you choose a health plan with a lower out-of-pocket maximum than you’re currently paying, you may save money, depending on the difference in premiums. In many cases, you'll find that the lower out-of-pocket limit more than offsets the higher premiums.

ACA-compliant plans (ie, all major medical plans that aren't grandmothered or grandfathered) are required to have out-of-pocket maximums that don't exceed $8,700 for a single individual in 2022. But there are also numerous plans, in both the employer-sponsored and individual/family markets, that have out-of-pocket maximums well below the upper limits.

How to Find a Plan With Lower Out-of-Pocket Limits

Look for a plan with a relatively high deductible and coinsurance, but a lower overall out-of-pocket limit. Since most people never reach the out-of-pocket maximum, the higher the deductible and coinsurance the less the company has to pay for healthcare services for its typical members. This allows them to charge a lower premium.

Since you know you’ll be paying the full out-of-pocket amount during the year, the higher deductible and coinsurance don't increase your yearly costs. In fact, since you're choosing a plan with a lower total out-of-pocket maximum, your yearly costs will be lower than they would have been on a plan with a higher out-of-pocket maximum—regardless of the deductible. (We'll talk about premiums in the next section, but it's important to pay attention to your total costs, including premiums and out-of-pocket medical expenses. A lower out-of-pocket limit won't be beneficial if you face a premium increase that more than offsets the savings.)

But when you know that you're going to have high medical costs, the number that matters most in terms of the plan design is the maximum out-of-pocket exposure, since you know you're going to be reaching that limit one way or the other. It won't matter whether you get there via deductible alone or deductible plus coinsurance and/or copays, so the plan design beyond the out-of-pocket limit isn't as important when you're facing significant claims costs during the year.

However, the higher deductible and coinsurance do have an impact on when you pay your out-of-pocket expenses, shifting that toward the beginning of the plan year. You’ll reach the out-of-pocket maximum earlier in the year because it's lower and thus easier to reach. But because your deductible is higher, your out-of-pocket costs will be front-loaded towards the start of the year (ie, you'll be paying your own costs at the beginning of the year, while you're meeting your deductible, and then your insurer will be paying your costs later in the year, after you've met your deductible and then your out-of-pocket maximum).

Choose a Plan With the Same Out-of-Pocket Maximum but a Lower Premium

Another way to save is to shop for a health insurance plan with the same out-of-pocket limit as your current plan—or perhaps even a lower out-of-pocket limit—but a lower monthly premium. While you’ll still have similar yearly out-of-pocket healthcare expenses, you’ll save money each month on the cost of the premium.

Once again, look at plans with a higher deductible and coinsurance than your current plan. Although you’ll need to have money available in the first few months of the year to meet your new expenses, you’ll have wiggle room in your budget since you’ll be paying less in monthly premiums.

Buyer Beware

If you've got a medical condition that requires significant ongoing care, it's important to pay attention to the specifics—beyond the premium and cost-sharing—of the plans you're considering. You'll want to make sure that the new plan has a provider network that includes your healthcare providers, or that you'd be ok with switching to the medical professionals who are on the plan's network.

And keep in mind that each plan covers different prescription drugs. The covered drug list for a plan is called the formulary, and formularies vary from one plan to another. If you inadvertently enroll in a plan that doesn't include your medication in its formulary, you would have to switch drugs or treatments or pay the entire cost out-of-pocket. Because your healthcare costs are so high, it’s crucial that you thoroughly investigate a new health plan’s benefit coverage before you switch.

The Affordable Care Act Helps With Costs

The Affordable Care Act also created a cost-sharing subsidy to help decrease the out-of-pocket maximum for eligible people with modest incomes (up to 250% of the poverty level; for 2022 coverage, this translates to $32,200 for a single individual in the Continental U.S.).

This subsidy is available to people who buy their own health insurance through the exchange, as long as they select a silver plan. If your income makes you eligible for this subsidy, you should understand how it would reduce your out-of-pocket maximum and make your benefits more robust before you select a health plan. If you're eligible for the cost-sharing subsidy and you select a bronze plan, you could end up leaving a lot of money on the table. Your monthly premiums will be lower with the bronze plan, but you'll miss out on the cost-sharing subsidy and might end up with much higher out-of-pocket costs as a result.

Before You Switch Plans

Make sure you’ll have enough money available early in the plan year to pay the potentially higher initial costs like deductible and coinsurance before you meet the new out-of-pocket limit and start reaping the savings. Consider a Flexible Spending Account if your employer offers one, or a Health Savings Account if you enroll in a health plan that's HSA-qualified.

If sticking with your current healthcare provider is important to you, make sure he or she is in-network with the health plan you’re considering.

Summary

It's uncommon for a person to meet their health insurance out-of-pocket limits every year. But for those who do—or for a person who anticipates large one-time medical expenses in the coming year—there are strategies for reducing total health care spending. For example, it can sometimes be beneficial to select a plan with a higher deductible but lower out-of-pocket limit, especially if the plan has a lower monthly premium.

A Word From Verywell

If you're meeting your health plan's out-of-pocket limit every year, or if you're anticipating significant medical costs for an upcoming year, there may be ways you can reduce the total amount you spend. You'll need to include premium costs and out-of-pocket costs, and also factor in any potential tax savings from an HSA or FSA, if they're available to you.

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