When considering annual limits, what do health insurance policies typically include?

Health insurance policies typically include annual limits that define the maximum payout for covered services within a policy year. This means that the insurer will only pay a specified amount for medical services and expenses incurred by the insured during that year. Once this limit is reached, the insured is responsible for any additional costs. This concept is essential in understanding how health insurers manage risk and costs, and it helps in budgeting healthcare expenses for both insurers and policyholders.

By establishing an annual limit, health insurance policies help ensure that coverage is provided while also protecting the insurer from excessively high claims. This structure aids in maintaining a balance between affordable premiums for policyholders and the financial sustainability of the insurance provider.