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

An out-of-pocket maximum refers to the cap that an insured individual must pay for covered medical expenses within a specific policy year. Once the insured reaches this limit, the insurance plan takes over, covering 100% of the costs for any additional covered services for the remainder of the policy period. This feature provides financial protection to the insured by limiting their total spending on healthcare, ensuring that out-of-pocket costs do not spiral out of control in the event of significant medical needs.

The other options do not accurately define the concept. The least amount for coverage does not relate to out-of-pocket expenses; instead, it pertains to premiums. The average cost of premiums is a separate aspect of health insurance financial considerations. Lastly, the total amount paid by insurers during a claim refers to the insurer's expenses and does not pertain to the out-of-pocket limits for the insured party.