3 Ways the Affordable Care Act Limits Out-of-Pocket Costs

By Lisa Yagoda, Nicole Duritz, Joan Friedman

Copyright © 2014 AARP. All rights reserved.

A significant financial protection the Affordable Care Act (ACA) provides relates to out-of-pocket costs. The maximum out-of-pocket costs for any insurance plan sold on the Health Insurance Marketplace are $6,350 for an individual plan and $12,700 for a family plan. (The limits change each year to parallel increases in medical costs.)

Be sure to keep a couple of key points in mind about these maximums:

  • The limits the ACA sets do not include your insurance plan premium, any balance-billed charges (money you may owe — especially when you get care outside of your plan’s network — if a difference exists between what your provider charges and what your plan pays for that service), or costs for items that your plan doesn’t cover. The SBC will set forth what’s in this limit.

  • Insurers count your copayments, coinsurance payments, and deductibles toward the out-of-pocket limit. Here’s what these terms refer to:

    • Copayment: Your copayment is a fixed dollar amount that you pay out of pocket for a healthcare service (such as $25 for a visit to your primary care provider and $50 for a visit to a specialist).

    • Coinsurance payment: Some people think this term refers to a copayment, but it’s a different out-of-pocket expense. A coinsurance payment is expressed as a percentage instead of a dollar amount. For example, your plan may require that you pay 20 percent of the allowed cost of a service. That 20 percent is your coinsurance payment.

      For example, say that your plan requires you to pay 20 percent of surgery costs up to a limit of $3,000. That means you’re responsible for coinsurance payments (20 percent of the costs) up to $3,000 (after which the insurer pays 100 percent).

    • Deductible: Your deductible is the amount you pay out of pocket at the beginning of your insurance plan year before your insurance company pays toward your claims.

  • If your household income falls below certain thresholds, insurers offering plans through the Health Insurance Marketplace must lower your out-of-pocket maximums for essential health benefits.

The out-of-pocket maximums reflect the most money you will pay during a given plan year (or during another set policy period) before the insurer has to start paying 100 percent of covered costs for your use of essential health benefits in the plan’s network.