What does "out-of-pocket maximum" refer to in health insurance?

The term "out-of-pocket maximum" in health insurance signifies the total amount an insured individual must pay for covered health care services within a specific policy year. Once this limit is reached, the insurance company covers 100% of the costs for additional covered services for the remainder of that year. This provision is designed to protect policyholders from excessive financial burden due to healthcare costs.

In contrast, the other options do not accurately describe the out-of-pocket maximum. The fixed annual fee for maintaining insurance coverage refers to premiums, not the out-of-pocket maximum. The deductible is the amount an insured must pay upfront before insurance kicks in, which is not related to the out-of-pocket limit. Costs associated with non-covered services pertain to expenses not reimbursed by insurance at all and are therefore separate from the benefits that come into effect after reaching the out-of-pocket maximum.