Definition
The out-of-pocket maximum (OOPM) is the annual cap on an employee's total cost-sharing — including deductibles, co-pays, and co-insurance — for in-network covered services. Once an individual or family reaches the OOPM, the health plan covers 100% of in-network covered expenses for the remainder of the plan year. Under the ACA, plans must set in-network OOPMs no higher than federally mandated limits ($9,450 for individuals and $18,900 for families in 2025). Out-of-network services may have separate, higher OOPMs or no cap at all.
What This Means for Employers
The out-of-pocket maximum is the primary financial protection mechanism for employees facing serious illness or major medical events. Setting the OOPM at or near the federal maximum reduces your plan's actuarial value — meaning employees bear more cost — and is a form of cost-shifting that damages morale and financial wellness. A well-designed plan balances the employer's need to manage costs with genuine financial protection for employees. For self-funded employers, the OOPM also defines the maximum per-member exposure before the specific stop-loss kicks in, making it a critical input to your stop-loss design.
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