Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

Full Bio →

Written by

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

Full Bio →

Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Jul 19, 2021

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.


With the cost of health care coverage soaring, there is increasing concern regarding how much insurance can dent a personal or family budget.

Fortunately, you can easily calculate the worst case scenario for health insurance costs in a particular year if you know the “out-of-pocket maximum” on your particular policy.

A typical out-of-pocket maximum might be $5,000 for a policy during the year.

What this means is that no matter how much you spend in health care costs during a single year, you will not be responsible for paying more than $5,000 of your own money.

But note that the cost of your insurance premium, whether paid in full at policy inception or over time via monthly payments, is not included in this figure.

Be certain to add the out-of-pocket maximum to your total premium to determine the maximum annual health insurance costs for yourself and/or your family.

So what costs are included in your out-of-pocket maximum?

Annual Deductible – as with most insurance policies, there is an insurance deductible in place, which is meant to deter frequent, potentially needless visits. You pay the deductible amount prior to the insurance company pitching in one dollar.

This helps keep the cost of health insurance down for everybody, as settling even the smallest insurance claims can be costly for your insurance company. Your policy may have a flat family deductible, or a per-person deductible.

Co-Pay – this is the amount of money you are required to pay for a doctor visit or prescription drugs (any single event). For example, your policy may require you to pay 20 percent of the doctor visit and a flat rate of $20 for each prescription medication you obtain.

Co-Insurance – This is similar to a co-pay, but is typically an annual figure. For example, you may be required to pay 20 percent of your total annual healthcare costs after your deductible is met, up to your out-of-pocket maximum.

There are certain types of health care policies that do not include some or all of the expenses above in the calculation of your out-of-pocket maximum, so be sure to compare plans carefully.

Compare Quotes From Top Companies and Save

 Secured with SHA-256 Encryption

Higher Out-of-Pocket Maximum = Lower Premium

As a rule of thumb, a health care plan with higher deductibles, co-pays, co-insurance, and an overall higher out-of-pocket maximum will come with a lower premium.

This type of coverage is typically known as a “catastrophic health care plan,” as you’re paying little in premium because you don’t really anticipate needing  heath care services.  You essentially have health care coverage in place in case of emergencies.

If it feels like you’re paying a large chunk of your own total healthcare costs, you are. That’s the way the system works. Health insurance is designed to protect us against very large medical bills.

Five thousand dollars may seem like a lot of money, but anyone who has become seriously ill or injured knows it can be just a drop in the bucket compared to what you could be on the hook for if uninsured.

Contact an independent agent and/or get insurance quotes online if you’re currently without health insurance coverage.

It’s the best way to ensure you receive the best coverage at the lowest price.

(photo: Mike Schmid)