Deductible Definition | OnlineHealthIns.com Glossary

Deductible

Also known as: Annual Deductible

The amount you must pay out of pocket for covered care each year before your health plan starts sharing costs through copays or coinsurance.

A deductible is the dollar amount you're responsible for paying toward covered health services before your insurance begins to pay its share. Once you've paid enough in eligible expenses to hit the deductible, the plan typically starts covering a percentage of costs through coinsurance, or a flat fee through copays, depending on the service.

Deductibles usually reset once a year, often on January 1 or your plan's renewal date.
Many plans exempt certain services, like preventive care, from the deductible entirely.
Family plans often have both an individual deductible and a higher family deductible.

Deductibles interact closely with premiums: plans with lower premiums often have higher deductibles, and vice versa. They also interact with the out-of-pocket maximum, since money you pay toward your deductible generally counts toward that yearly cap.

A frequent point of confusion is assuming every visit is subject to the deductible. Preventive services like annual checkups and many vaccines are typically covered at no cost even before the deductible is met, under ACA rules.

Example

A member with a $1,500 deductible pays the full negotiated rate for an MRI until their year-to-date medical spending reaches $1,500, after which coinsurance kicks in.

Good to Know

Preventive care is usually exempt from the deductible, so an annual physical often costs nothing even if you haven't met your deductible yet.

Related Terms

Out-of-Pocket Maximum — The most you'll have to pay in a plan year for covered services before your health insurance starts paying 100% of covered costs.

Coinsurance — The percentage of a covered service's cost you pay after meeting your deductible, with your insurance plan paying the rest.

Copay (Copayment) — A fixed dollar amount you pay for a specific covered service, like a doctor visit or prescription, regardless of the service's actual cost.

Premium — The amount you pay, usually monthly, just to keep your health insurance coverage active, regardless of whether you use any care.