What does the term "deductible" refer to in medical insurance?

The term "deductible" in medical insurance refers to the amount that a policyholder must pay out-of-pocket for healthcare services before their insurance begins to cover the costs. This means that if a person's deductible is set at a certain amount, they are responsible for paying that amount in medical expenses each year before their insurance policy starts to contribute to the payment of medical bills.

Understanding a deductible is crucial for healthcare budgeting and planning because it directly impacts how much a policyholder will pay in total for their medical care. Once the deductible is met, the insurance company typically starts to pay a percentage of the covered expenses, while the policyholder may still need to cover some costs such as co-pays or coinsurance, depending on their specific policy terms. This concept is different from other terms regarding insurance, such as the total bill covered, limits of coverage, or fees associated with visits, which do not describe the upfront costs that need to be paid before insurance benefits are utilized.