Deductible
The amount you pay out of pocket for covered services before your insurance begins to pay.
Definition
A deductible is the amount you must pay out of pocket for covered services or claims before your insurance company starts paying its share. Once you meet your deductible, insurance kicks in to cover a portion (or all) of additional costs — depending on your plan.
Deductibles reset annually for health insurance and per claim for most property and casualty policies (auto, home).
Health insurance example: If your annual deductible is $1,500, you pay the first $1,500 of covered medical expenses each year before your insurance begins sharing costs. After meeting the deductible, you typically pay a copay or coinsurance for each subsequent service.
Auto insurance example: If your collision deductible is $500 and you have a $3,000 repair, you pay $500 and your insurer pays $2,500.
Choosing your deductible: Higher deductibles mean lower monthly premiums but more out-of-pocket exposure when something happens. Lower deductibles mean higher premiums but less financial shock at claim time. The right balance depends on your savings cushion and expected usage.
Examples
Your health insurance has a $2,000 deductible. You have knee surgery costing $8,000. You pay $2,000; your insurance covers the rest (subject to coinsurance).
Your auto insurance has a $500 collision deductible. A fender bender causes $800 in damage. Your insurance pays $300; you pay $500.
A family with a $6,000 family deductible has two members who each need care. The combined costs count toward the same $6,000 family deductible.
Frequently asked questions
Does my deductible reset every year?
For health insurance, yes — deductibles typically reset on January 1 (or your plan anniversary). For auto and home insurance, deductibles apply per claim rather than annually.
Do copays count toward my deductible?
It depends on your plan. Some plans count copays toward the deductible; others don't. Check your Summary of Benefits and Coverage (SBC) for your specific plan.
What's a family deductible vs. an individual deductible?
Individual deductibles apply per person. Family deductibles are the combined limit — once the family collectively meets the family deductible amount, insurance pays for all covered family members regardless of individual deductibles met.
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