In health insurance, what is the purpose of a deductible?

The purpose of a deductible in health insurance is fundamentally to require insured individuals to pay a portion of their healthcare costs before their insurance coverage begins to contribute. This mechanism helps to limit the number of small claims and incentivizes individuals to be more mindful of their healthcare expenses, as they must first meet the deductible amount out of pocket. Typically, once the insured pays the set deductible amount for a policy period, the insurance company will then commence coverage, often involving co-pays or co-insurance for subsequent services.

Deductibles play a crucial role in the overall structure of health insurance plans as they can affect premium costs. Generally, plans with higher deductibles may have lower premiums, and vice versa, allowing consumers to choose policies that align better with their financial preferences and healthcare usage patterns. Therefore, understanding how deductibles function is essential for navigating health insurance effectively.