In healthcare, a deductible is a set amount of money that a patient must pay for approved medical services out of their own pocket before their health insurance plan starts to pay for care. It’s basically a limit you have to reach before your insurance coverage starts. Many health insurance plans have deductibles, and there are several reasons for this:
- Cost-Sharing: Deductibles are a way for the covered person and the insurance company to share costs. By making people pay for some of their health care costs up front, insurance rates can stay lower for everyone.
- Financial Responsibility: People are more likely to care about their health decisions when they have a financial stake in them. In addition, they are more likely to make smart decisions about when and where to get medical care if they are responsible for paying for some of it.
- Financial Risk Mitigation: Insurance companies use limits to reduce the risk they face. By having customers pay part of the costs, insurers can lower the risk of having to pay out a lot of money in claims.
- Prevent Overuse: Deductibles can stop people from using health care services too much or when they aren’t needed. Without fees, people might be more likely to go to the doctor for small problems, which would drive up the cost of health care.
- Affordability: Plans with bigger deductibles usually have lower annual payments, so a wider group of people can get health insurance. It’s a way to balance regular costs with costs you might have to pay out of pocket.
In short, deductibles are an important part of health insurance plans. They are meant to split the cost of health care between the person and the insurance company, push people to make smart decisions about their health care, and make insurance coverage more affordable for a larger number of people.