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

The term "out-of-pocket maximum" refers specifically to the highest amount an insured individual is required to pay for covered healthcare services in a given year. Once the individual reaches this limit, the health insurance plan typically covers 100% of the costs for any additional covered services for the remainder of that plan year. This feature is designed to protect individuals from excessive outlays on healthcare expenses, ensuring that they do not face indefinite financial burden from high medical costs.

In contrast, other options do not encapsulate this concept. The total annual premium relates to the periodic payment made to keep the health insurance policy active, rather than direct costs incurred from services. The contribution amount by insurers also does not pertain to out-of-pocket costs directly paid by the insured individual. Additionally, the threshold for initiating a health coverage review involves assessing the plan's effectiveness or provider network, rather than defining costs borne by the insured. Therefore, the correct answer precisely describes the established limit on out-of-pocket costs incurred by the insured.