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

The term "deductible" in a health insurance policy refers to the amount a policyholder must pay out-of-pocket for healthcare services before the insurance company begins to cover costs. This financial threshold encourages policyholders to share in the costs of their healthcare while also providing the insurer a level of protection against small claims.

For example, if your health insurance plan has a deductible of $1,000, this means you will need to pay the first $1,000 of your medical bills before your insurance kicks in and starts covering the costs of covered healthcare services. This concept is crucial in understanding how health insurance works and helps in managing healthcare expenses effectively.

The other definitions provided do not accurately describe the function of a deductible within a policy. The amount the insurance company pays does not reflect what the policyholder needs to contribute before receiving benefits. Similarly, the total cost of healthcare services in a policy period is an aggregate measure, not related to the initial out-of-pocket expenses incurred by the insured. Lastly, the fixed fee paid at the time of service generally refers to copayments, which differ from deductibles in functionality and timing of payment relative to the insurance company’s coverage.