Deductible

A clause in a health insurance policy indicating the amount the insured must pay before the insurance company begins payment for covered medical or health costs.

The amount of loss or expense that must be incurred by an insured or otherwise covered individual before an insurer will assume any liability for all or part of the remaining cost of covered services. Deductibles may be either fixed dollar amounts or the value of specified services (such as two days of hospital care or one physician visit). Deductibles are usually tied to some reference period over which they must be incurred, e.g. $100 per calendar year, benefit period, or spell of illness. Deductibles in existing policies are generally of two types: (1) static deductibles which are fixed dollar amounts, and (2) dynamic deductibles which are adjusted from time to time to reflect increasing medical prices. A third type of deductible is proposed in some national health insurance plans: a sliding scale deductible, in which the deductible is related to income and increases as income increases.

The amount of money an insured person must pay “at the front end” before the insurer will pay. In automobile collision insurance with a $100 deductible, the insured must pay any damage under $100 in its entirety, and the first $100 when the total is over that amount. The reason for introducing this concept into health care coverage is primarily to discourage “unnecessary” use of services, and also to reduce insurance premiums, since all claims have a minimum amount which the insurer will be spared on every claim.

An expense borne by an insured party before any obligated payments are made by the insurer.

The amount that the subscriber must pay before an insurance company begins paying for medical services.

The portion of a person’s yearly medical expenses that he or she must pay before the insurance company begins paying.