What's a Deductible?

What’s a deductible? That’s probably one of the most common terms thrown around when it comes to any kind of insurance coverage — not just health insurance.

Healthcare coverage can be confusing. What you need to pay to receive healthcare services — or what you owe after receiving those services — isn't always clear. Understanding health insurance deductibles and how they work can prepare you for expenses when you use your coverage.

The deductible is the portion of a covered healthcare service that you pay before your health insurance starts to pay for services. In other words, you have to reach your deductible before the insurance company starts paying for your healthcare services.

Your health insurance has a set deductible for the year. If you have a family health insurance plan, it will likely have individual deductibles and a family deductible. Even after you reach your deductible, you might still have to pay a portion of the bills you receive in the form of copayments and coinsurance.

However, your health insurance company might pay for some services without you paying your deductible first. For example, most healthcare insurance covers preventative care in full without you meeting your deductible. There might also be other specific services that don't require you to meet your deductible before the insurance company pays their portion. Some plans allow you to see your primary care provider for a small copayment before you reach your deductible.

How Deductibles Work

Say the deductible amount is $1,000 for the year. When you receive healthcare services, you'll pay for the first $1,000, and then your insurance company will start paying their portion. For example, if you're having surgery, you'll pay for the first $1,000 of bills related to that surgery. After the first $1,000, you'll share the cost with the insurance company, often through coinsurance. Your plan might cover 80% of the remaining costs, while you pay for 20%. You only have to reach your deductible once per year. After that, your insurance company will automatically pay its portion for all future healthcare services.

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Can I Lower My Deductible?

Every health insurance plan has a set deductible. You can shop around for different healthcare coverage with a lower deductible if you get your insurance on your own. If you're covered through work, you're limited to the plans they offer. Keep in mind that lower-deductible plans will have higher monthly premiums. If you are shopping around, you should try to find a balance of affordable monthly premiums and a deductible you want.