Out of Pocket (OOP) and OOP Maximum
Out of pocket and out-of-pocket are terms (like copayment and co-payment) that are the same. You will see them both ways in the following text, so that you can get used to these formats.
Your insurance policy will limit the dollar amount you have to pay in expenses per year at an individual and family level. This set amount is known as your out of pocket(OOP) maximum. Once you have reached your OOP maximum, your insurance carrier will pay 100% of the contracted, or usual and customary, charges for benefits covered by your policy.
If you chose to use the services of non-participating (non-par provider) you will be required to pay more towards your OOP expenses before your maximum is reached.
Out of pocket is typically associated with fee-for-service and Preferred Provider Organization policies. Fee-for-service policies usually only consider the amount you have paid in the form of co-payments towards your out-of-pocket expense. Preferred provider policies typically credit both your deductible and your co-payments towards your out-of-pocket maximum.
How It Works:
Going back to the skiing accident you had in January, we see that by March, your $1000 deductible and all the co-pays you shelled out for your equipment, home care services, hospitalization and countless doctors' appointments have totaled $1500. Your insurance carrier has done their medical accounting by applying the $1500 you have paid out of your pocket towards the $2500 OOP maximum.
Remember the example we used for the non-par provider? In this example, you paid a total of $1750. Your co-payment of $750 was based on the usual and customary rate. It is this amount that will be applied to your OOP max. The additional l $1000 above the usual and customary rate will not be applied to the OOP max.
By April, you have paid $2500 in expenses to various participating providers and have met your OOP maximum. In June, you are scheduled to undergo a second surgery for the removal of the pins used to repair your fractured leg.
The hospital and surgeon are both participating providers. Because you have met your OOP max, your insurance carrier will pay 100% of the surgery and hospitalization fees in addition to any other claims you may have through the end of the year. You are on your way towards saving for that trip to Aspen!
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