Out of pocket, in the context of insurance, refers to health care expenses the policyholder has to pay with their own financial resources. Often, health insurance policies include an out-of-pocket limit or maximum over the course of a year. In this case, after having paid that amount out of their own pocket, a policyholder can expect the insurance company to cover the entirety of future insured health services fees.
Examples of out-of-pocket expenses would include a $500 deductible, a co-pay of $20 for certain health services, and 20% coinsurance payments after meeting the deductible payment on subsequent health services. Once all qualifying expenses add up to the out-of-pocket limit, the insurance company then covers all insured health benefits for the remainder of the year.
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