What does the term deductible mean in healthcare insurance?

The term "deductible" in healthcare insurance specifically refers to the amount that the insured individual must pay out-of-pocket for healthcare services before their insurance coverage begins to pay. This foundational concept ensures that individuals take responsibility for a portion of their healthcare costs before the insurer steps in to cover further expenses.

The deductible serves as a way to share costs between the insured and the insurance provider, promoting a sense of accountability and often influencing healthcare utilization decisions. For instance, if a person's deductible is set at $1,500, they are required to pay that amount for services like hospital visits or prescription medications before their insurance policy will provide coverage for additional services.

On the other hand, the maximum amount the insurance covers relates to coverage limits and not directly to the deductible itself. The total cost of healthcare services in a year may include both the deductible and other costs such as copayments and coinsurance, while the reimbursement amount from an insurance company refers to how much they pay healthcare providers after the deductible and other costs have been considered.