OUT OF POCKET MAXIMUM v. DEDUCTIBLE

One question we often get asked is “what is maximum out of pocket versus deductible?”  Basically the are these two issues are opposite ends of the patient responsibility spectrum

Deductible is patient responsibility before anything is paid by the insurance company.  As claims are submitted and processed,  the insurance company identifies services which contractually have a deductible.  The insurance company will tally or track how much of the deductible has been satisfied based upon the claims that have been submitted.    Once the deductible has been reached, the insurance company will begin to issue payments for claims.  Keep in mind deductibles are tallied based upon allowance not the amount charged by the provider.

Should the patient have a co-insurance or a co-payment, this amount will also be tracked by the insurance company as claims process.  These amounts are all deducted from the allowable reimbursement for the services, and that net amount will be the payment issued to the provider.

Many contracts have a maximum out of pocket, often called a “stop loss” limit.   This is the maximum limit that the patient would have to pay during a contract period.  This amount generally is a summation of all deductible amounts, co-payment amounts, and co-insurance amounts.  At this point the patient is no longer responsible for any out of pocket expenses, and the insurance company will pay the full allowance.

Unfortunately Out of Pocket Maximums have been largely eliminated or raised to unreasonable levels, but you will see them for some patients.