In health insurance, what does "deductible" refer to?

In health insurance, a deductible refers to the amount the insured must pay out-of-pocket for healthcare services before the insurance company begins to cover costs. This means that if a patient incurs medical expenses, they are responsible for covering the deductible amount first. Once this threshold is met, the insurance coverage kicks in, and the insurer starts to pay a portion of the costs for covered services. Understanding the deductible is key because it directly affects how much an individual will ultimately pay for their healthcare within a given policy year.

For instance, if a deductible is set at $1,000, the policyholder must spend that amount on medical services themselves before their insurance coverage takes effect. This arrangement influences healthcare usage and financial planning for individuals who must account for these out-of-pocket expenses in their budgets.