What is a deductible in health insurance?

A deductible is an amount that an insured individual must pay out-of-pocket for healthcare services before their health insurance starts to cover the costs. This amount is typically specified in the insurance policy and is applicable each policy year. For example, if your deductible is $1,000, you will need to pay that amount for your medical expenses before your insurance kicks in to cover additional costs.

This structure is designed to share the costs of healthcare between the insurance provider and the insured, encouraging policyholders to use medical services judiciously. Knowing that they have to pay a certain amount out of their own pockets can prevent unnecessary medical visits and costs.

The other choices describe different aspects of health insurance but do not define a deductible accurately. A fixed payment for each visit refers to a copayment, a percentage of healthcare costs relates to coinsurance, and an annual premium is the amount paid for the insurance coverage itself, unrelated to the deductible concept.