Deductible
A deductible is a specified dollar amount that an insured individual must pay before their insurance coverage begins to take effect. The purpose of a deductible is to help control insurance costs by having the insured person share in the cost of their own healthcare. Once the deductible has been met, the insurance will typically begin to pay a portion of the costs, usually a percentage, until the policy reaches its limit of coverage.
For example, if an individual has a $1,000 deductible and incurs $5,000 in medical expenses, the individual would be responsible for paying the first $1,000 of those expenses, and the insurance would pay the remaining $4,000.
Deductibles can vary by the type of insurance, plan, and policyholder and can be applied to different services, for example a policy may have a different deductible for inpatient hospital stay than for office visits.
Deductibles can apply to the whole year or per benefit period, so once an individual meets the deductible for the year, they won't have to pay it again until the next year, unless the policy states differently.
It is worth noting that some plans, such as health savings accounts (HSA) plans, have high deductibles, but also have high out-of-pocket maximums which is the most an individual would have to pay in a year.
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