What Is the Difference Between Deductible and Out-of-Pocket Maximum?

In simple terms: A deductible is the amount you must pay for covered health services before your insurance starts paying. The out-of-pocket maximum is the most you’ll have to pay in a year — after which your insurance covers 100% of covered costs.

Both terms are key to understanding how much you’ll spend on healthcare in a year.

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🔍 Understanding Deductible: Your Starting Cost

• The deductible is the initial amount you pay each year before your health insurance starts to share costs.
• If your deductible is $1,500, you’ll need to pay that full amount first before your plan begins paying for most services.

Common Features of a Deductible:

• Resets annually
• Applies to most services (not usually to preventive care)
• Different from copays

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🧾 What Is an Out-of-Pocket Maximum?

Your out-of-pocket maximum is the total you’ll spend in a plan year before your insurance covers 100% of eligible healthcare costs.

It includes:

• Deductible
• Copays
• Coinsurance

💡 It does NOT include: premiums or out-of-network charges.

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🆚 Deductible vs. Out-of-Pocket Maximum Chart

Feature	Deductible	Out-of-Pocket Maximum
Definition	Initial yearly amount you pay	The most you’ll pay in total
Includes copays/coinsurance	❌ No	✅ Yes
When it resets	Every calendar year	Every calendar year
After it’s met	Insurance cost-sharing begins	Insurance pays 100% of costs
Limit on spending	❌ No	✅ Yes

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💡 Bullet Point Recap

• Deductible = What you pay before insurance helps
• Out-of-pocket max = The limit on what you’ll pay in total
• Deductible is part of your out-of-pocket maximum
• Once the max is hit, insurance pays everything else

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📊 Visualizing the Concept

Let’s say your plan looks like this:

• Deductible: $1,500
• Out-of-pocket max: $6,500

You pay the first $1,500 fully.
Then you pay shared costs (copays/coinsurance) until your total spending reaches $6,500.
After that, insurance covers everything 100% for the rest of the year.