What is a deductible in health insurance terms?

In health insurance terminology, a deductible refers to an amount that a policyholder must pay out-of-pocket for healthcare services before their insurance plan begins to cover costs. In other words, it is the threshold that needs to be met; once the deductible is paid, the insurance company will then begin to share the costs of covered services.

Understanding this concept is crucial because it directly affects how individuals plan for their healthcare expenses. For example, if a policy has a deductible of $1,000, the insured must cover the first $1,000 of their medical expenses themselves. After reaching that amount, the insurer will start paying for eligible medical services according to the terms of the policy.

This distinguishes a deductible from other related terms such as premiums, which are the amounts paid regularly to maintain the health insurance, and co-pays or coinsurance, which refer to the cost-sharing mechanisms that occur after the deductible has been met.