A deductible is an amount paid out of pocket by the policyholder before an insurance provider will pay any expenses. It is a threshold for policy payments used by insurance companies to deter the large number of claims that a consumer can be reasonably expected to bear the cost of. Deductibles are typically provided as clauses in an insurance policy that dictate how much of an insurance-covered expense is borne by the policyholder. They are normally quoted as a fixed quantity and are a part of most policies covering losses to the policyholder. The insurer then becomes liable for claimable expenses that exceed this amount (subject to the maximum sum claimable indicated in the contract) .

Deductibles are used in various types of insurance policies, including health insurance policies. In health insurance, a deductible is the amount you pay for covered health care services before your insurance plan starts to pay. For example, if your health plan’s deductible is $1,500, you’ll pay 100% of eligible health care expenses until the bills total $1,500. After that, you share the cost with your health plan by paying coinsurance. Different things affect your premium, which is the amount you pay each month to maintain your health care coverage.

In general, the higher the deductible, the lower the premium, and vice versa. Once you max out your deductible, you pay a copayment or coinsurance for services covered by your healthcare policy, and the insurance company pays for the rest. The average individual, employer-provided coverage deductible was $1,763 during the Open Enrollment Period in 2022.

In summary, a deductible is an amount paid out of pocket by the policyholder before an insurance provider will pay any expenses. It is a threshold for policy payments used by insurance companies to deter the large number of claims that a consumer can be reasonably expected to bear the cost of. Deductibles are used in various types of insurance policies, including health insurance policies.