Think of a deductible as your "entry fee" to insurance coverage. Before your insurance company starts sharing costs with you, you need to pay this amount yourself each year.
How Deductibles Work
Here's the basic flow:
- You receive medical care (doctor visit, lab work, hospital stay, etc.)
- You pay the full cost until you reach your deductible amount
- Once you've paid your deductible, insurance starts sharing costs
- At the end of the year, your deductible resets to zero
Sarah has a $1,500 deductible. In March, she needs an MRI that costs $1,200. She pays the full $1,200, leaving $300 remaining on her deductible. In June, she has a $500 procedure. She pays $300 (to complete her deductible), and her insurance covers the remaining $200 at her coinsurance rate.
Types of Deductibles
Individual vs. Family Deductible
Family plans have two deductibles:
- Individual deductible: What one person must pay before insurance kicks in for them
- Family deductible: The total amount the family must pay together
Once any family member meets their individual deductible, insurance starts covering that person. Once the family deductible is met, everyone is covered.
Medical vs. Prescription Deductible
Some plans separate these:
- Medical deductible: Applies to doctor visits, hospital stays, procedures
- Prescription deductible: Applies only to medications
Many preventive services (annual checkups, vaccinations, cancer screenings) are covered at 100% before you meet your deductible under ACA-compliant plans. Don't skip these because you haven't met your deductible yet!
Choosing the Right Deductible
Higher deductible = Lower monthly premium (but more risk)
Lower deductible = Higher monthly premium (but more protection)
Consider a Higher Deductible If:
- You're generally healthy with few medical needs
- You have savings to cover unexpected costs
- You want lower monthly payments
- You're eligible for a Health Savings Account (HSA)
Consider a Lower Deductible If:
- You have ongoing health conditions
- You take expensive medications
- You expect to have a baby or surgery
- You prefer predictable costs
Not Sure Which Deductible is Right for You?
Our licensed agents can review your situation and recommend the best balance of premium and deductible.
Get Free GuidanceFrequently Asked Questions
Do I have to pay the deductible before insurance pays anything?
Not always. Many plans cover preventive care at 100% before you meet your deductible. Also, copays for doctor visits and prescriptions often apply before the deductible is met. Check your specific plan details.
Does my deductible reset every year?
Yes, deductibles typically reset at the beginning of each plan year (usually January 1st, though some employer plans may differ). Any amount you paid toward last year's deductible doesn't carry over.
What's the difference between deductible and out-of-pocket maximum?
Your deductible is what you pay before insurance starts helping. Your out-of-pocket maximum is the most you'll pay all year—after that, insurance covers 100%. The out-of-pocket max includes your deductible plus copays and coinsurance.
Are deductibles different for in-network vs. out-of-network?
Yes, most plans have separate deductibles. Out-of-network deductibles are typically much higher, and money spent out-of-network usually doesn't count toward your in-network deductible.