What does the term "deductible" mean in health insurance?

The term "deductible" in health insurance refers to the amount an individual must pay out-of-pocket for healthcare services before their insurance plan begins to cover costs. This means that if a healthcare service is received, the insured is responsible for paying for that service up to the dollar amount of the deductible. Once this threshold is met within a given policy period, the insurance company will then start to cover a portion of the costs for further services received, oftentimes requiring the insured to co-pay or share additional costs.

Understanding the function of a deductible is crucial for policyholders, as it affects their overall healthcare expenses and their budgeting for medical costs. Different health insurance plans may have varying deductible amounts, and knowing one's deductible is vital for effective financial planning regarding healthcare expenses.