How are deductibles defined in health insurance?

Deductibles in health insurance are defined as the amounts that an insured individual must pay out-of-pocket for covered healthcare expenses before the insurance company begins to share the costs. This pre-established amount must be met in a policy year before the insurer starts to pay for most services. For instance, if a health insurance plan has a deductible of $1,000, the insured must pay this amount in bills for eligible medical services before the insurer covers any further costs.

This structure encourages individuals to share some of the costs of healthcare while keeping premiums lower, as higher deductibles typically correlate with lower insurance premium costs. Understanding this concept is crucial for policyholders to navigate their healthcare expenses and insurance coverage effectively.