April 9, 2010, Newsletter Issue #225: Out-of-Pocket Expense Maximums

Tip of the Week

There are many costs associated with buying health insurance plans. There are the premiums you pay for the coverage, the deductible you must pay before the plan will pay benefits, and there are the co-pays you must pay to cover your portion of the cost of goods and services received. Out-of-pocket expenses are those costs, such as the deductible and co-pays, that you must pay yourself and for which you will receive no reimbursement from your insurance company.

The maximum out-of-pocket expense is the maximum amount you will be responsible to pay out-of-pocket before your plan begins covering goods and services at 100 percent. Assuming your maximum out-of-pocket expense for the calendar year is $1,500 for a family plan that covers you, a spouse, and two children, a deductible of $250 per family member with a combined maximum deductible of $500 for all members, would have you paying a combined deductible of $500 before your plan would start paying any benefits.

Once benefits start being paid out, you would have to pay another combined (i.e. for all family members, not per family member) $1,000 in co-pays. At that point, you will have reached the plan's maximum out-of-pocket expense and all covered goods and services would be paid for in full by your plan until the end of the calendar year. As you might expect, premiums do not count toward your out-of-pocket maximum expense.

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