Definition
What Is an Out-of-Pocket Maximum?
Last updated
An out-of-pocket maximum, also called an out-of-pocket limit, is the most you have to pay during a plan year for covered health care and prescription costs, including your deductible, copayments, and coinsurance, before your plan starts paying 100% of covered, in-network costs for the rest of that year. Premiums and non-covered or out-of-network charges generally don't count toward this limit.
How it affects what you pay
Tracking your progress toward your out-of-pocket maximum matters most if you take an expensive, ongoing medication, since reaching that limit can substantially change your costs for the remainder of the plan year. HealthCare.gov's glossary describes the out-of-pocket maximum as how much you'll pay for certain covered services and items each year before your plan starts to pay, aside from free preventive services (HealthCare.gov Glossary, out-of-pocket maximum/limit). For Medicare Part D specifically, CMS confirmed that the CY 2026 annual out-of-pocket threshold for covered Part D drugs is $2,100, an increase from the original $2,000 cap that took effect in 2025, adjusted annually based on drug expenditure growth (CMS, Final CY 2026 Part D Redesign Program Instructions). Once a Part D enrollee reaches that threshold, they generally owe nothing further for covered Part D drugs for the rest of the year.
Example
Consider a hypothetical patient with a chronic condition requiring an expensive medication covered under Part D. Once their combined deductible, copayment, and coinsurance spending on covered drugs reaches the annual out-of-pocket threshold for that year, they would generally not owe further cost-sharing on covered Part D drugs for the remainder of the year. This is a general illustration, not a specific patient's real costs.
What counts and what doesn't
Deductibles, copayments, and coinsurance for covered, in-network services and prescriptions typically count toward your out-of-pocket maximum. Monthly premiums, amounts you pay for out-of-network care, and costs for services your plan doesn't cover generally do not count. If your plan uses a copay accumulator, manufacturer-paid copay assistance also may not count toward your out-of-pocket maximum, even if it lowers what you personally pay at the counter.
Tracking your progress
Your insurer's or Part D plan's member portal typically shows how much of your out-of-pocket maximum you've used so far in the current plan year. This is especially worth checking if you're managing an expensive prescription, since knowing where you stand can inform decisions about timing refills or exploring patient assistance programs before you reach the limit. Compare prescription prices on BetterBuyRx to understand how cash pricing compares if you're weighing options before your out-of-pocket maximum resets.
Planning around your out-of-pocket maximum
Because this limit resets at the start of each new plan year, expenses can feel highest early in the year and lower once you've reached the cap. Search your medication on BetterBuyRx throughout the year to keep an eye on pricing, particularly around your plan's renewal date.
Frequently asked questions
What counts toward my out-of-pocket maximum?
Generally your deductible, copayments, and coinsurance for covered, in-network services and prescriptions count. Monthly premiums and out-of-network or non-covered charges typically do not count toward this limit.
Does Original Medicare have an out-of-pocket maximum?
Original Medicare (Parts A and B) does not have an overall annual out-of-pocket limit, which is one reason many people add supplemental coverage. Medicare Advantage plans are required to have an out-of-pocket limit for Part A and B services, and Part D now has its own separate annual cap.
What happens once I reach my out-of-pocket maximum?
Your health plan generally pays 100% of the cost of covered, in-network benefits for the remainder of that plan year, though you'll still owe your monthly premium.
Sources
Compare prices & find savings
This page is for cost and savings education only. It is not medical advice. Talk to your doctor or pharmacist about your specific medications and coverage. Prices vary by pharmacy, location, quantity, and eligibility.
Related terms & guides
- What Is a Deductible?
Deductible definition: what you pay before insurance kicks in for prescriptions, how it resets, and how it interacts with copays and coinsurance.
- What Is Coinsurance?
Coinsurance definition: how the percentage-based cost share works for prescriptions, how it differs from a copay, and how it affects your bill.
- What Is a Copay Accumulator?
Copay accumulator definition: how these programs stop manufacturer copay assistance from counting toward your deductible, and what it means for you.