What is meant by a deductible in health insurance?

A deductible in health insurance refers to the specific amount that the insured individual must pay for covered healthcare services before their health insurance begins to share costs. This means that until the deductible is met, the insurance company does not make contributions toward the payment of medical expenses related to the insured's policy. Once the deductible is satisfied, the insurance starts to cover a portion of the costs for further medical expenses, often splitting costs through coinsurance or copayments.

Understanding the function of the deductible is crucial for policyholders as it directly impacts their out-of-pocket expenses. It incentivizes individuals to consider their healthcare choices, as they will be responsible for all costs until they reach that deductible threshold. This structure helps insurance companies maintain lower premiums by discouraging unnecessary medical usage since insured individuals bear more immediate costs.