Monday
The Annual Out-Of-Pocket Maximum of a Health Insurance Policy
If you are healthy and do not have an accident that requires extensive medical care, you may never have to give a thought to the Annual Out-of-Pocket Maximum guideline on your health insurance policy. But, what if your medical bills for the calendar year add up to tens of thousands of dollars or more? For instance, for a one night stay after surgery to insert a metal rod into his broken leg; our client's bill for his hospital stay alone was over $20,000 dollars! Under your plan, how much of a bill like that would you be responsible for?
This is where the Annual Out-of-Pocket Maximum comes into play:
This guideline refers to the maximum amount of health care costs that you have to pay for with your own money in a calendar year. With a deductible plan, all services count towards this dollar amount. However, while coinsurance and co-payments are usually included in the amount applied towards it, your annual deductible is typically excluded. This may vary and you should read your policy guidelines to find out what is true for your policy. This guideline kicks in once you have met your annual deductible. After you have paid expenses up to the annual limit, 100 percent of covered services will be paid for by the insurance company for the remainder of that calendar year. Before the maximum amount is met, you and the insurance company share the cost of all covered expenses according to the co-insurance guidelines of your particular plan after the initial deductible has been met. The annual out-of-pocket maximum can be per individual or per family if more than one person is covered by the policy. And eligible expenses for one family member, or any combination of family members, can satisfy the requirements for the whole family unit depending on what your policy states. An individual maximum applies separately to each covered person, so that each member must meet the annual maximum before the insurance company contributes to the health care costs of that individual. Whereas with a family plan, the limit applies to all covered members of a family. Depending on the guidelines, meeting the maximum can be shared by two or more family members. This leads us to one of the most common footnotes to this guideline, the two member max.
The Two Member Max Clause:
If more than one person is covered under your policy, it is quite common to have a "2 member max" stipulation. With this clause, two of the family members must each meet the costs payable by the insured per calendar year before the rest of your health care expenses are paid for by the insurance company. If one member meets the maximum before the other, the insurance company will cover that person's health care costs, but not those of the other members. Also, that member's expenses covered by the insurance company will not count towards any other member's requirement. However, once two members have reached the amount dictated, the insurance company will cover the health care expenses of all the members covered under that plan.
Here is an Example of How this All Works:
Suppose you have a deductible of $3,000 and an out-of-pocket maximum of $5,000. Once you have met the deductible, you will have $2,000 of additional expenses before the maximum is satisfied. The remaining $2,000 will be covered with either coinsurance or copayments, depending on your plan. Hopefully, you will never have to face health care costs that cause your Annual Out-of-Pocket Maximum to come into play. But if you do, make sure you know the specific guidelines of your policy.
[expert=Corinne_Mitchell]
