What is the term for the maximum amount a policyholder must pay out-of-pocket for covered services in a plan year?

The term for the maximum amount a policyholder must pay out-of-pocket for covered services in a plan year is known as the out-of-pocket maximum. This amount represents the cap on the total expenses an insured person has to incur for covered healthcare services during a specific plan year. Once the individual has paid this maximum amount, the health insurance plan typically covers 100% of the allowed charges for covered services for the remainder of the year.

This feature of health insurance is designed to protect policyholders from excessive costs associated with their healthcare. It provides a level of financial security, knowing that once they reach this limit, they will not have to pay further out-of-pocket expenses for covered services, barring any other non-covered or out-of-network charges.

Understanding the out-of-pocket maximum is crucial for policyholders as it helps in budgeting healthcare expenses and evaluating the overall cost of a health insurance plan. While terms like premium, deductible, and co-pay are also related to healthcare costs, they represent different aspects of what individuals may need to pay for their health coverage and are not synonymous with the out-of-pocket maximum.