In health insurance, what does "deductible" mean?

In health insurance, a deductible refers to the amount that a policyholder must pay out-of-pocket for covered healthcare services before their insurance begins to pay. For instance, if a health insurance plan has a $1,000 deductible, the policyholder must incur and pay $1,000 in medical expenses before the insurer starts to cover additional costs. This mechanism is intended to prevent overutilization of medical services and to encourage policyholders to consider costs when seeking care.

Deductibles vary widely among different insurance plans and can influence the overall cost of premiums, as plans with higher deductibles typically have lower monthly premiums. Understanding the role of deductibles is crucial for managing healthcare expenses and planning for financial obligations in the event of medical needs.