What does 'out-of-pocket maximum' mean in health insurance?

The concept of 'out-of-pocket maximum' refers to the highest amount of money a patient is required to pay for covered healthcare services within a specific plan year. Once this limit is reached, the insurance plan covers 100% of the costs for covered services. This means that throughout the year, any payments made toward deductibles, copayments, and coinsurance count towards this out-of-pocket maximum.

Understanding this concept is essential for managing healthcare costs effectively, as it provides a financial safety net. Patients can plan their healthcare expenses because they know that after reaching this maximum amount, they will no longer have to pay for eligible services, offering an important level of predictability in medical spending.