What does the term "deductible" refer to in a health insurance plan?

The term "deductible" in a health insurance plan specifically refers to the amount an individual must pay out of pocket for healthcare services before their insurance coverage begins to pay. This means that until the insured has paid the total deductible amount, they are responsible for covering all healthcare costs in full. Once the deductible has been met, the insurance policy typically covers a larger portion of the costs, leading to reduced out-of-pocket expenses for the insured.

Understanding the function of a deductible is essential in managing healthcare costs effectively, as it sets a threshold that must be met prior to the insurance plan contributing to payments for services. This is a fundamental concept in health insurance that impacts both the insured individual’s budgeting for health care and their access to necessary medical services.