What does the term "out-of-pocket maximum" represent?

The term "out-of-pocket maximum" refers to the maximum amount that a policyholder is obligated to pay for covered healthcare expenses in a given policy period, typically a calendar year. Once this threshold is reached, the insurance provider will cover 100% of the remaining costs for covered benefits. This concept is designed to protect policyholders from excessive medical expenses by capping their financial responsibility, ensuring that they are not burdened with unlimited costs in the event of significant health issues.

Understanding the out-of-pocket maximum is crucial for consumers as it helps them plan for their healthcare costs. It includes various expenses that the policyholder pays out-of-pocket, such as deductibles, copayments, and coinsurance. However, it does not typically include premiums, nor does it count any costs incurred for non-covered services. Thus, option B accurately captures the function and implications of the out-of-pocket maximum in health insurance plans.