What is Deductible?
Definition
A deductible is the fixed dollar amount a policyholder must pay out of pocket for covered services before the insurer begins to share costs. Deductibles apply annually and reset each plan year. Preventive care, certain drugs and telehealth visits are often excluded from the deductible.
Real-World Example
A worker with a $2,500 deductible pays the first $2,500 in medical bills. On dollar $2,501, coinsurance kicks in and the insurer pays 80% while the member pays 20% until the out-of-pocket maximum is reached.
Why It Matters
The deductible determines how much financial risk the policyholder carries. Choosing a high-deductible plan can save $1,200+ in yearly premiums but exposes the household to five-figure bills after a single hospitalization.
Frequently Asked Questions
Does the deductible apply to every service?
No. Preventive services required by the ACA (annual physical, mammogram, immunizations) are covered at 100% before the deductible is met.