Final answer:
Most fee-for-service plans include a 'deductible,' which is the amount of annual out-of-pocket expenses a policyholder must pay before the insurance covers additional costs. After reaching the deductible, the policy also has an out-of-pocket maximum to protect against catastrophic expenses.
Step-by-step explanation:
Most fee-for-service plans have a "deductible", the most you will have to pay for medical bills in ANY ONE YEAR. This means that you will have to pay out-of-pocket medical expenses up to a certain amount before your insurance coverage kicks in to pay the balance. For instance, if your deductible is $1,000, you pay for the first $1,000 of your medical expenses, and then your insurance would cover the costs after that threshold is met. Additionally, insurance policies may include co-payments (flat fees) or coinsurance (a percentage of costs) that the policyholder is responsible for paying when accessing medical services.
Once the deductible amount is reached, some fee-for-service plans also have an out-of-pocket maximum. This is the limit on what you will pay in a year for covered services. If your medical expenses exceed the out-of-pocket maximum, your insurance plan will cover 100% of the additional costs for covered services. This protects policyholders from catastrophic medical expenses and ensures financial predictability.