What does "out-of-pocket maximum" mean in the context of health insurance?

The term "out-of-pocket maximum" refers to a specific limit set by a health insurance plan on the total amount of money that an insured person has to pay for covered medical expenses in a given year. Once the insured reaches this limit through their payments—such as co-payments, co-insurance, and deductibles—the insurance will cover 100% of the costs for any further covered services within that same year. This feature is designed to protect policyholders from excessive out-of-pocket expenses, ensuring that they retain some financial security even in the face of significant medical needs.

In contrast, other options describe different aspects of health insurance or misinterpret the concepts. For example, the lifetime cost option refers to total expenses over an individual's lifetime, while the option concerning coverage kicking in refers to a deductible rather than out-of-pocket maximums. The reference to out-of-network costs only relates to specific networks and does not encompass the broader context of maximum out-of-pocket limits that apply to all covered services within an insurance plan.