What does "out-of-pocket maximum" mean in a health insurance policy?

The term "out-of-pocket maximum" in a health insurance policy refers specifically to the highest amount that the insured will pay for covered services within a policy year. Once this limit is reached, the health insurance plan typically pays 100% of the costs for covered services for the remainder of that policy year. This helps to protect the insured from excessive expenses due to medical care, ensuring that they do not face unlimited financial liability for health care costs.

Other options provided, while related to health insurance, do not accurately define the out-of-pocket maximum. The first option incorrectly describes it as the maximum amount paid by the insurance company, which does not convey the financial responsibility of the insured. The second choice implies that coverage ends after reaching a certain amount, which does not align with the concept of out-of-pocket limits, as coverage continues for the remainder of the year once the out-of-pocket maximum is met. Lastly, the fourth choice is about the total cost of the policy itself, not the costs incurred by the insured for services received under that policy.