What does the term 'deductible' signify in a health insurance policy?

In a health insurance policy, the term 'deductible' signifies the initial amount that the policyholder must pay out of pocket for covered healthcare services before the insurance company begins to make any payments. This means that if a policyholder incurs medical expenses, they must first pay up to the deductible amount themselves before the insurer starts covering the costs of their healthcare services.

This concept is important for policyholders to understand as it directly affects their overall healthcare costs. Once the deductible is met, the insurer contributes to the costs based on the terms of the policy, which may include co-pays, co-insurance, or a maximum out-of-pocket expense limit. Knowing the amount of the deductible helps individuals budget for their healthcare expenses and understand their financial responsibilities when seeking medical care.