What is a 'deductible'?

A deductible is defined as the amount that the insured individual is required to pay out-of-pocket before their health insurance begins to cover any medical expenses. This means that before the insurance company starts sharing in the costs of healthcare, the insured must meet this financial threshold first.

For example, if a health insurance policy has a deductible of $1,000, the insured will need to pay the first $1,000 of their medical costs. Once this amount has been met, the insurance provider will start to pay for covered services according to the terms of the policy, which may include co-pays or co-insurance, depending on the plan.

Understanding the role of deductibles is crucial for managing healthcare expenses and making informed decisions about coverage. It emphasizes the importance of evaluating one’s personal health needs and financial situations when selecting an insurance plan.