Health insurance terminology can be tricky, but sometimes life throws you a softball. Out-of-pocket maximum, for example — the definition is in the name. What a relief!
In reality, there’s a little more to it. If you don’t keep your terms straight, you risk mixing your out-of-pocket maximum up with your deductible, and that could be an expensive mistake. But with a little guidance, figuring things out isn’t too difficult.
Your deductible is the dollar amount that you can expect to pay in full before your insurance benefits kick in and begin covering some of your costs. This means that after you rack up enough medical bills to reach your deductible amount, you only have to pay for part of your health care costs. The percentage you’ll pay is called your coinsurance.
The out-of-pocket maximum also refers to a dollar amount that you can expect to pay, but it’s broader than the deductible. Your out-of-pocket maximum includes your deductible, your copays and your coinsurance all under one umbrella. After you reach this higher ceiling, you won’t have to pay at all for covered care — your insurance carrier will cover these costs in full.
The last thing you want is to get an unexpected medical bill because you reached your deductible and thought your cost-sharing responsibilities were behind you. So study your health insurance vocabulary flashcards and make sure you understand how everything stacks up before you sign on the dotted line.