What does the term "deductible" refer to in health insurance?

The term "deductible" refers specifically to the amount a policyholder must pay out-of-pocket for covered healthcare services before their insurance begins to pay. This means that until the deductible is met, the individual is responsible for all costs associated with their medical care. For example, if a health insurance plan has a deductible of $1,000, the insured must pay the first $1,000 of their medical expenses themselves. Once this threshold is reached, the insurance company will start to cover its share of the costs, based on the terms of the policy.

Understanding this concept is crucial because it helps consumers know how much they will need to budget for medical expenses before insurance starts to contribute. Deductibles can vary significantly among different health insurance plans, making it an important factor to consider when evaluating coverage options. The other choices relate to aspects of health insurance but do not capture the precise definition of a deductible.