What is a deductible in health insurance?

Imagine health insurance as a financial shield protecting you from high medical bills. However, this shield doesn't kick in immediately. You have to pay a certain amount upfront before your insurance starts sharing the costs. This initial amount you pay is called the deductible.

Think of it like a car insurance deductible. If you get into a minor accident and the repairs cost $500, which is less than your deductible of $1,000, you'd pay the full $500 out of pocket. Your insurance wouldn't cover anything.

Here's how it works with health insurance:

• You have a deductible amount, say, $2,000. This means you'll pay for the first $2,000 of covered medical expenses each year.

• Once you reach $2,000 in covered expenses, your insurance kicks in. They start sharing the costs according to your plan. You might have a copay (a fixed amount for certain services) or coinsurance (a percentage of the bill).

• Preventive care, like checkups and vaccinations, usually doesn't count towards your deductible. This means your insurance might cover them even before you reach your deductible.

Here's the key takeaway:

• A deductible is your out-of-pocket expense before your insurance starts covering costs.

• Higher deductibles typically come with lower monthly premiums (the amount you pay to maintain your insurance).

• Lower deductibles usually mean higher premiums, but you'll pay less out of pocket for covered services after meeting the deductible.

Choosing the right deductible depends on your individual needs and budget. Consider how often you typically use healthcare services and if you can comfortably afford a higher upfront cost.

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