What is the difference between a deductible and an out-of-pocket maximum?
A deductible is the point where the plan starts sharing the bill. The out-of-pocket maximum is the point where the employee’s share stops growing for the year. The first applies to covered care generally, the second to covered in-network care.
What is behind the short answer.
The short answer is above. These are the details that decide it for a specific plan.
The deductible is the starting line
Until it is met, the employee pays the allowed amount for most covered services, apart from items like preventive care or flat copays.
The out-of-pocket maximum marks the finish
Every deductible dollar, copay and coinsurance payment on covered in-network care adds up toward that cap. Reach it, and the plan pays covered costs until the year ends.
A simple example
Picture a plan with a 1,500 dollar deductible, 20 percent coinsurance and a 4,000 dollar ceiling. The employee covers the first 1,500 dollars, then one fifth of what follows, and never owes more than 4,000 dollars across the year for covered in-network services.
What neither includes
Premiums, uncovered services and, usually, out-of-network care sit outside both numbers.
The starting line and the finish line on one chart.
Sample plan: the step at the start of the line is the deductible, and the flat stretch at the top is the out-of-pocket maximum.
Numbers are for illustration; real plans differ.
The bill
Imagine a covered hospital stay with an allowed amount of 6,000 dollars.
The deductible
Deductible first: the employee is responsible for 1,500 dollars.
The coinsurance
Coinsurance next: 20 percent of the 4,500 dollars still owed comes to 900 dollars.
The result
Net result: 2,400 dollars from the employee and 3,600 dollars from the plan.
What the rules say.
The figures and requirements in this section are drawn from the federal sources listed at its end. They are general information, not legal advice.
The 2026 federal limit
Under the 2026 federal rules, a non-grandfathered group health plan cannot ask for more than 10,600 dollars from a person with self-only coverage, or 21,200 dollars with any other tier. Those amounts are HHS revisions of the 10,150 and 20,300 dollars first published for 2026.
Minimums and ceilings for HSA plans
To qualify for a Health Savings Account, a plan needs a 2026 deductible of at least 1,700 dollars for self-only or 3,400 dollars for family coverage, and an out-of-pocket maximum no higher than 8,500 or 17,000 dollars.
Family plans apply the limit person by person
A family contract does not change this: no individual member can be made to pay more than the self-only figure for covered in-network essential health benefits.
Plans can set a lower limit
Federal law sets a ceiling, not a target. Many plans choose a maximum well under it, so your plan summary shows the number that actually applies to you.
Sources: 42 U.S.C. 18022 | 26 U.S.C. 223
We put both numbers in the same row.
When we compare plans for employees, the deductible and the out-of-pocket maximum are shown together so the starting line and the finish line are visible at once.
Related pages.
Understanding the Deductible
What an employee pays for covered care before the plan begins sharing costs.
Out-of-Pocket Maximum in Plain Terms
The yearly ceiling on an employee’s spending for covered in-network care.
Costs That Count Toward the Maximum
In general, deductible, copay and coinsurance payments for covered in-network services all count.
Group Health Plan Confusion: A Guide
Our complete guide to helping employees understand their group plan.
Questions that come up next.
Quick replies to the next questions employees tend to ask, each on its own page.
Do Copays Apply to the Deductible?
It depends on the plan design. Certain plans apply copays toward the deductible and others do not. Copays typically count toward the out-of-pocket maximum on covered in-network care; verify in your plan documents.
Do High-Deductible Plans Always Cost Less?
Not necessarily. Premiums tend to be lower, but a year with substantial medical use can leave the employee spending more. The better fit depends on the care someone expects to use and whether they can fund the deductible if needed.
How Do Coinsurance and Copays Differ?
A copay is a set dollar charge for a given service, whereas coinsurance is a percentage of a covered service’s cost that the employee pays once the deductible has been met.
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General information on group health plan terms only; it is not legal or tax advice. Take plan-specific questions to the plan documents and the carrier.
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