Understanding Out-of-Pocket Maximums and Copays

Quick overview

Out-of-pocket maximums (OOP max) and copays are two of the main levers that control how much you actually pay for healthcare, beyond premiums. The OOP max is a year-long safety net: once you’ve reached it for covered, in-network services, the insurer must pay 100% of additional covered costs for the rest of that plan year. Copays are routine, fixed fees you pay when you use a service (a primary care visit, a specialist visit, or certain prescriptions).

This article explains how these pieces fit together, which costs count toward the OOP max, pitfalls to avoid, and practical strategies to budget and pick the right plan for you.

How OOP maximums, deductibles, copays, and coinsurance interact

• Deductible: amount you pay first for covered services before most insurance benefits kick in. Not every plan treats every service the same—some preventive care is covered before you meet the deductible.
• Copay: fixed dollar amount per visit or service (e.g., $25 office visit, $10 generic drug). Copays may apply before and after meeting the deductible depending on the plan.
• Coinsurance: percentage split after the deductible (for example, 20% you / 80% insurer).
• Out-of-pocket maximum: the cap on what you pay in a year for covered services. Deductibles, copays, and coinsurance generally count toward this cap for in-network covered services; premiums do not.

Sources: Healthcare.gov and CMS explain these plan components and that out-of-pocket limits apply to covered, in-network essential benefits (Healthcare.gov; CMS).

What typically counts — and what doesn’t — toward the out-of-pocket maximum

Commonly counted toward OOP max:

• Deductible payments for covered, in-network services
• Copays for covered, in-network services
• Coinsurance for covered, in-network services

Commonly excluded from OOP max:

• Monthly premiums
• Amounts you pay for non-covered services (cosmetic care, elective procedures not covered by plan)
• Costs for out-of-network care in many plans (these may be subject to a separate limit)
• Services that your plan design explicitly excludes

Note: States, plan types (e.g., grandfathered plans), and employer plans can vary. Always confirm with your insurer and policy documents.

Example scenario: how the numbers add up

Assume a plan year with these features:

• Deductible: $2,000
• Copay: $30 per primary care visit / $50 per specialist visit
• Coinsurance: 20% after deductible
• Out-of-pocket max: $6,000 (example)

Scenario: you need a surgery costing $20,000 (facility, surgeon, anesthesia) that’s a covered in-network service.

1. You pay the deductible first: $2,000.
2. Remaining eligible billed amount = $18,000. With 20% coinsurance, you owe $3,600 and insurer pays $14,400.
3. Your total paid toward OOP so far = $2,000 + $3,600 = $5,600.
4. If you had prior copays earlier in the year totaling $500, your total would already be $6,100 — that means you’ve reached the $6,000 OOP max somewhere in the process, and you wouldn’t be charged beyond $6,000. In practice, plan payments and negotiated rates affect these numbers, but this is the basic flow.

This shows why both the deductible and coinsurance matter: a low copay plan with high coinsurance can still expose you to large bills before the OOP max is hit.

Real-world nuances and protections

• Preventive services: Under the Affordable Care Act, many preventive services are covered without cost-sharing when delivered in-network (Healthcare.gov). That means those services may be free even before you meet a deductible.
• Surprise billing / balance billing: Federal protections (the No Surprises Act) and state rules limit unexpected balance bills for many emergency and certain out-of-network situations. But those protections don’t eliminate all out-of-network exposure—verify before elective care (CMS).
• Marketplace and large-group plans: Non-grandfathered plans must follow federal rules about what counts toward the OOP max and must display OOP limit amounts on the Summary of Benefits and Coverage (Healthcare.gov; CMS).
• HSA-eligible HDHPs: High-deductible health plans that work with Health Savings Accounts have specific deductible and OOP requirements set by the IRS. If you’re considering an HDHP with an HSA, review IRS guidelines and plan details.

What to check in your plan documents (summary and proof-of-coverage)

• Exact OOP max for single vs family coverage
• Whether out-of-network costs count toward the plan’s OOP max
• Which services are exempt from cost-sharing (preventive care, some screenings)
• How copays apply relative to the deductible (e.g., copays may be waived for in-network preventive care)
• Whether separate OOP limits exist for prescription drugs

If anything is unclear, call the insurer and ask for a written clarification. Save your Summary of Benefits and Coverage (SBC) for quick reference.

Useful reading on FinHelp: How Deductibles and Out-of-Pocket Maximums Work and Copayment (Copay).

Practical strategies to reduce or manage OOP spending

1. Shop in-network providers and confirm negotiated rates before elective procedures. Network status is the fastest way to limit surprise costs.
2. Use preventive care and annual screenings — these are often covered without cost-sharing and can prevent costlier treatment later (Healthcare.gov).
3. If eligible for an HSA, contribute pre-tax dollars to pay expected OOP costs and invest long term. HSAs pair with HDHPs but check IRS rules for HDHP minimums.
4. Compare total expected annual cost, not just premiums. Use the FinHelp guide How to Estimate Out-of-Pocket Health Costs Before Major Procedures for a planning template.
5. Negotiate bills or request itemized statements for large claims; many providers will offer payment plans or financial assistance.
6. Consider a plan with higher premiums and lower OOP max if you expect significant care in the year — this can limit risk of a catastrophic medical bill.

For help choosing between plan types see FinHelp’s primer on Choosing Between High-Deductible and Traditional Health Plans.

Common mistakes people make

• Assuming all out-of-network costs count toward an in-network OOP max. They often do not.
• Forgetting that premiums are not part of the OOP max.
• Overlooking prescription drug OOP limits or separate drug tiers that have their own rules.
• Not tracking cumulative copays and coinsurance — small, frequent copays add up and can push you toward your OOP max faster than you expect.

Practical checklist before a major procedure or new medication

• Call your insurer and request a benefits estimate for the specific CPT/diagnosis code.
• Confirm all providers (surgeon, anesthesiologist, facility) are in-network.
• Ask whether copays count toward the deductible or OOP max in your plan.
• Request an itemized estimate and compare to the insurer’s allowed amount.
• Explore payment plans or financial assistance with the provider.

Tracking and documentation

Keep copies of EOBs (explanation of benefits) and receipts. Use your insurer’s online portal to verify progress toward deductibles and OOP max. If you itemize taxes, track medical expenses separately — medical expense deductions remain available for qualifying costs above the IRS threshold (see IRS Publication and rules on medical expense deductions).

Short FAQs (practical answers)

• Will copays count toward my OOP max? Usually yes for covered, in-network services, but check plan details.
• Do premiums count toward the OOP max? No.
• If I hit my OOP max, does that include out-of-network care? Generally no, unless your plan’s design explicitly includes out-of-network limits.

Professional takeaway

In my practice advising families and small-business owners, clients who run the numbers (expected visits, likely prescriptions, and any known upcoming procedures) and compare total expected annual costs consistently choose better-fitting plans. A lower premium can feel like a saving — until a single hospitalization exposes you to high coinsurance or a large deductible.

Plan comparison should weigh: premiums, deductible, copays, coinsurance, and the out-of-pocket maximum together. If you want to limit financial risk, prioritize a lower OOP max even if it means slightly higher premiums.

Sources and further reading

• Healthcare.gov — guide to cost-sharing and preventive services: https://www.healthcare.gov
• Centers for Medicare & Medicaid Services (CMS) — consumer protections and plan rules: https://www.cms.gov
• IRS — rules on HSAs and medical expense deductions: https://www.irs.gov

Professional disclaimer: This article is educational and does not constitute personalized financial, tax, or medical advice. For decisions about your insurance or taxes, consult your insurer, a licensed insurance advisor, or a tax professional.