What is the purpose of a deductible in health insurance?

The purpose of a deductible in health insurance is to specify the amount that a policyholder must pay out-of-pocket for healthcare services before their health insurance begins to cover costs. This means that until the individual has paid the deductible amount, they are responsible for paying the full amount of their medical expenses. Once this threshold is met, the insurance plan typically covers a portion of the subsequent costs, according to the terms of the policy.

Understanding deductibles is crucial because they are designed to share the responsibility of healthcare costs between the insured and the insurer. It also plays a role in preventing overutilization of medical services, as patients may be more prudent in seeking care before reaching their deductible.