What is the definition of 'out-of-pocket maximum'?

The out-of-pocket maximum is defined as the highest amount an individual has to pay for covered healthcare services in a plan year before their health insurance begins to pay 100% of the costs for those services. Once an individual reaches this limit through deductibles, copayments, and coinsurance, they are no longer responsible for any further out-of-pocket costs for covered services for the remainder of that plan year.

This feature of health insurance plans is essential as it provides financial protection by capping the individual’s potential expenses, ensuring they do not face unlimited out-of-pocket costs for necessary medical care. Understanding this definition helps individuals navigate their healthcare expenses and plan for future medical needs, as it directly impacts budgeting and financial security regarding healthcare.