Out-of-pocket maximum term. What is the term for the maximum amount you pay out of pocket in a year?

• A. Premium
• B. Deductible
• C. Out-of-Pocket Maximum
• D. Copay

Answer: (C)

Think about how health plans limit your exposure to costs. The out-of-pocket maximum is the maximum amount you pay out of your own pocket in a year for covered medical services. It acts as a safety net: once you reach that limit, the plan generally covers 100% of remaining covered expenses for the rest of the year. Premiums aren’t included in this limit, and amounts like your deductible, copays, and coinsurance typically count toward reaching it. Some plans may have nuances, such as different limits for in-network versus out-of-network care or non-covered services, but the basic idea is a yearly cap on cost-sharing to prevent catastrophic bills.