What is the significance of the deductible in a health insurance plan?

In a health insurance plan, the deductible is defined as the initial amount that the insured must pay out-of-pocket for healthcare services before the insurance company begins to pay its share of the costs. This means that the policyholder is responsible for covering this specified amount first, which typically applies to many types of medical expenses, such as hospital visits, surgeries, and sometimes prescriptions.

Once the deductible is met, the insurance policy usually covers a portion of subsequent medical expenses according to the terms of the policy, such as copayments or coinsurance. Understanding the function of the deductible is crucial for policyholders, as it impacts their overall healthcare costs and budgeting for medical expenses. By recognizing this aspect of their health insurance plan, insured individuals can make more informed decisions regarding their healthcare usage and financial planning.