A health insurance deductible is the amount of money you pay out of pocket for covered healthcare services before your insurance plan starts sharing the cost. Think of it as the threshold you need to cross each year before insurance really kicks in.
For example, if your plan has a $3,000 deductible, you’ll generally pay the first $3,000 of covered medical expenses yourself. After that, your insurance begins to pay part (or sometimes most) of the remaining costs, depending on your plan.
How Deductibles Actually Work
Deductibles usually reset every year. As you pay for eligible medical services—like doctor visits, lab work, imaging, or hospital care—those payments count toward your deductible.
Once you meet it, you move into the next phase of coverage, where you’ll typically pay coinsurance (a percentage of the cost) or copays (a flat fee) instead of the full bill.
Keep in mind that many plans cover certain services before you meet your deductible, such as preventive care (annual checkups, vaccines, screenings). These are often $0 out of pocket, even if you haven’t paid any portion of your deductible yet.
High Deductible vs. Low Deductible Plans
Plans with lower deductibles usually have higher monthly premiums but lower costs when you actually use care. Plans with higher deductibles often offer lower premiums but require you to pay more out of pocket when medical expenses arise.
High-deductible plans are commonly paired with Health Savings Accounts (HSAs), which allow you to save pre-tax dollars to help cover those out-of-pocket costs.
Why Deductibles Matter When Choosing a Plan
Your deductible plays a big role in how predictable (or unpredictable) your healthcare spending will be. If you expect frequent medical care, a lower deductible may reduce financial surprises. If you’re generally healthy and want lower monthly premiums, a higher deductible could make sense—especially if you’re building savings to cover it.
The key is matching the deductible to your budget, health needs, and risk tolerance.
