What is an out-of-pocket maximum?

• A. The maximum annual premium the policyholder can be charged.
• B. A fixed deductible that resets each year.
• C. The maximum amount the insured pays for covered services in a policy period.
• D. The maximum amount a insured pays for covered services in a policy period, after which the insurer pays 100% of covered costs.

Answer: (D)

The main idea is that the out-of-pocket maximum sets a cap on what you must pay for covered medical services during a policy period. It includes amounts you pay through deductibles, copayments, and coinsurance, and once you reach this limit, the insurer covers 100% of covered costs for the rest of that period. It’s important to note that premiums aren’t part of this limit. The best choice explicitly states that it’s the maximum you pay for covered services in a policy period, after which the insurer pays 100% of covered costs, which captures both the cap and the after-limit coverage. The other options either describe something that isn’t the out-of-pocket maximum (like premiums) or omit the crucial detail about the insurer’s full payment after reaching the limit.