What is an "out-of-pocket maximum" in healthcare insurance?

An "out-of-pocket maximum" in healthcare insurance refers to the highest amount a patient is required to spend for covered healthcare services in a plan year. This amount includes deductibles, copayments, and coinsurance, but does not apply to premiums or services that are not covered by the insurance plan. Once a patient has reached this maximum, the insurance plan pays for 100% of covered services for the remainder of the policy year.

This mechanism protects patients from excessive financial burden due to health care costs, ensuring that there is a cap on how much they have to financially commit to their care within a given time frame. Understanding this concept is crucial for patients as it helps them plan for their healthcare expenses while also providing a safety net against unexpectedly high medical bills.

The other options do not accurately describe the out-of-pocket maximum, with some referring instead to different aspects of insurance policies such as deductibles or coverage limits.