What are Out-Of-Pocket, Lifetime and Calendar Maximums?

The health care industry is notorious for filling paperwork with a million unfamiliar terms and phrases. So many, it’s a wonder anyone can ever get any medical treatment at all. There are co-pays, co-insurance, out-of-pocket expenses and maximums to name a few. What does it all mean? Take a minute to familiarize yourself with three common, but confusing terms used frequently in health insurance and save yourself time and energy later when you need to make important decisions regarding your health care coverage. Besides, the more you know, the easier it is to make the right health care choices for you and your family.


Out-of-pocket is a term that is used quite often in health care policies. Basically, it refers to the yearly amount of money that you, the policy-holder can expect to pay towards your health care. Unfortunately, it’s not quite that simple. Why? Well, for starters, out-of-pocket expenses are above and beyond your monthly premium and plan deductible- which incidentally, is still out-of-pocket isn’t it? The good news is that most insurance plans have an out-of-pocket maximum. Once you fulfill or meet your deductible, your plan then goes into co-insurance – the insurance starts to kick in. If you have a 80/20 plan that means that the insurance company pays 80% of all charges after the deductible and you pay 20% of all charges up to a maximum amount. The maximum dollar amount that you would have to pay after the deductible is based on your plan. Some plans have it capped at $1,000 or $3,000. Once that amount is met, then the insurance company assumes 100% of your medical costs.

Lifetime Maximums

Prior to the President signing the Affordable Care Act (ACA) into law on March 23, 2010, lifetime maximums were the maximum dollar amounts that an insurance carrier would cover up for the life of an insurance policy. As an example, if a policy you owned had a $5 million lifetime maximum and over the course of ten years you had claims in excess of that amount, the coverage would cease. No more insurance benefits. Again, that was before ACA, which now mandates that it is unlawful for an insurance policy to carry a lifetime maximum.

Calendar Maximums

Another tricky term used frequently is calendar maximum. A calendar maximum refers to the total dollar amount that your insurance company will pay for every insured person in one calendar year. The good news is that this amount starts over again every first of the year. According to ACA, a restricted annual limit on the dollar value of essential health benefits may be applied prior to 2014, benefits under this policy that are considered essential health benefits will not be subject to any annual limit on the dollar value of such benefits for any individual.

Healthcare terminology is confusing. Learn a few simple terms and make certain that when you are reviewing your health insurance terms and conditions, you are fully aware and knowledgeable. After all, it’s your healthcare policy, you should make sure that you understand exactly what is covered and for how long.

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