What is a deductible in health insurance?

Key Features of a Deductible

• Annual Amount: The deductible is usually calculated on a yearly basis. Once the policyholder pays this amount, the insurance company starts to pay its share of covered expenses.


• Out-of-Pocket Payment: The policyholder is responsible for paying the full cost of medical services until the deductible is met. This includes doctor visits, lab tests, and other medical procedures.


• Separate Deductibles: Some insurance plans may have separate deductibles for different types of services, such as medical care, prescription drugs, or out-of-network care.


• Family Deductible: For family health insurance plans, there may be both individual and family deductibles. Once the total family deductible is met, the insurance starts covering the costs for all family members.

How a Deductible Works

Here is an example of how a deductible works in a health insurance plan:

• Suppose you have a health insurance plan with a $1,000 annual deductible.


• If you visit a doctor and the bill is $200, you will pay the full $200 out-of-pocket because you haven't met your deductible yet.


• After several more medical expenses totaling $800, you have now paid $1,000 out-of-pocket for the year, meeting your deductible.


• Once your deductible is met, your insurance plan will begin to cover the cost of additional medical expenses according to the terms of your policy. For example, the plan may cover 80% of the costs, and you would be responsible for the remaining 20% (known as coinsurance).

Benefits and Considerations

• Lower Premiums: Plans with higher deductibles often have lower premiums, making them more affordable on a monthly basis. This can be beneficial for individuals who do not expect to have high medical expenses.


• Out-of-Pocket Costs: While lower premiums can be appealing, it's important to consider the potential out-of-pocket costs if you need significant medical care. High deductibles mean you will pay more upfront before insurance coverage kicks in.


• Financial Planning: It's essential to budget for the deductible amount and be prepared for out-of-pocket expenses, especially if you have a high-deductible health plan (HDHP).


• Preventive Services: Many health insurance plans cover preventive services, such as vaccinations and screenings, without requiring the deductible to be met first. This encourages individuals to seek preventive care and maintain their health.