In health insurance, what is a deductible?

A deductible in health insurance is defined as a fixed dollar amount that the insured individual must pay out-of-pocket before their health insurance plan starts covering costs for medical services. This mechanism is in place to ensure that policyholders take on some of the financial responsibility for their healthcare, typically encouraging them to be more judicious about their healthcare spending.

For instance, if a health insurance plan has a deductible of $1,000, the subscriber must pay the first $1,000 of their medical expenses each year before the insurance company begins to pay for additional covered services. This does not include premiums or co-pays; rather, it specifically refers to the amount that must be satisfied before claims can be reimbursed.

In contrast, the other options present concepts related to health insurance but do not correctly define what a deductible is. A percentage of costs shared by the insurer refers to co-insurance, which is the portion of expenses that the insured pays after the deductible has been met. Consulting a physician incurs a consultation fee, but this is not synonymous with a deductible. An annual premium is the cost paid to maintain coverage and is separate from the deductible, which pertains specifically to out-of-pocket expenses before benefits begin.