What Is a Deductible? 
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What Is a Deductible?

What Is a Deductible?
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Published on June 25, 2025
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A deductible is the amount of money you pay each year for healthcare before your insurance company starts to pay.

Until you meet your deductible, you are responsible for paying for your doctor’s visits or treatments, with some exceptions. Once you reach your deductible, your insurance company starts paying your bills or splitting this cost with you.

Your deductible can be high or low, depending on the type of plan you have. Your health plan’s deductible starts over each year, and the amount you owe may change annually.

How Does a Deductible Work?

When you pick a health insurance plan, you will choose your deductible. This is the amount you pay before your insurance kicks in. For example:

  • If you have a $2,000 deductible, you will have to pay $2,000 out of pocket before your insurance contributes to your bills.
One exception to this rule is that your insurance company may cover certain services, like preventive treatments, without requiring you to meet your deductible.

Deductible amounts can vary a lot, depending on your plan. If your plan covers more than one person, you may have both an individual deductible (the amount one person has to meet) and a family deductible (the amount the whole family has to meet). You also may have a deductible for prescription drugs separate from your deductible for medical services.

Will I Have to Pay Any Costs After Reaching My Deductible?

You may still have some costs after you meet your deductible.

Premium Payments

Premium payments are what you pay, usually monthly, to keep your health insurance active. You must pay your premium, whether or not you use any healthcare services. Premium amounts vary, depending on your plan, where you live, and your age. You will continue to pay your premium payments after you meet your plan’s deductible.

Copays

Many health insurance plans have copays. These are fixed payments you make each time you have a medical service done. For example, you might owe a $20 copay every time you have a doctor’s visit or get a prescription filled. Sometimes, copays go toward your deductible, but many times, they do not. Most often, you will have to pay copays for health services even after you reach your deductible. Copays usually count toward your out-of-pocket maximum.

Coinsurance

Coinsurance is the percentage of a medical bill that you pay after you reach your deductible. Many insurance plans offer an 80/20 coinsurance split. This means the insurance pays 80 percent of the bill, while you pay 20 percent.


Out-of-Pocket Maximum

Your out-of-pocket maximum is the most that you will pay for health services in a year. Once you reach this amount, your insurance company will pay 100 percent of your costs for the rest of the year. Your deductible counts toward your out-of-pocket maximum, so when you pay your deductible, you are closer to reaching your max. Premiums do not count toward your out-of-pocket maximum.

Here’s an example of how your deductible, coinsurance, and out-of-pocket maximum work:

  • Let’s say your health insurance plan has a $1,000 deductible and a $4,000 out-of-pocket maximum. You have surgery, and the bill is $10,000. You will pay $1,000 to reach your deductible. Then, you will split the remaining $3,000 with your insurance company (a coinsurance split) until you’ve reached your out-of-pocket maximum. Once you hit your $4,000 max, your insurance company will cover the rest.

How Does a Deductible Differ for In-Network vs. Out-of-Network?

Your deductible amount may depend on whether you use:

  • In-Network Care You go to doctors or hospitals that work with your insurance.
  • Out-of-Network Care You see providers that don’t work with your insurance.
You may have a separate deductible for in-network and out-of-network services. If this is the case, your out-of-network deductible is usually higher.


Is It Better to Choose a Low-Deductible or High-Deductible Plan?

It depends on your budget and your health needs. High-deductible plans usually come with a lower monthly premium and a higher out-of-pocket maximum. On the other hand, low-deductible plans have higher premiums and lower out-of-pocket maximums.

If you’re young and healthy, a high-deductible plan may be a better option. But if you have health concerns and want your coverage to kick in quickly, a low-deductible plan may be more preferable.

Here are some factors to consider when choosing a deductible plan.

A high-deductible plan may be a better option if you:
A low-deductible plan may be a better option if you:
Are young and in good health.
Are older or have a chronic medical condition.
Don’t visit your doctor often.
Visit your doctor frequently.
Don’t need prescription drugs.
Need expensive prescription drugs.
Aren’t planning to become pregnant.
Plan to become pregnant in the next year.
Don’t have a spouse or children.
Have a spouse or children.
Are financially able to cover out-of-pocket medical expenses if something unexpected happens.
Need assistance covering out-of-pocket expenses if something unexpected happens.

What Is an Aggregate Deductible?

An aggregate deductible is one big deductible that your whole family has to meet together before your insurance covers costs. With an aggregate deductible, it doesn’t matter who spends what. It’s the combined bill that counts. Once the aggregate deductible is met, the plan covers the costs for all the family members.

What Is an Embedded Deductible?

With an embedded deductible plan, insurance will cover costs once:

  • A single family member reaches their individual deductible or
  • The family deductible is reached.
Essentially, each family member has their own deductible within the family plan. If a single individual within the family reaches their deductible, the insurance company contributes to paying costs for just that person. Once the family deductible is met, the plan covers the costs for everyone.


The Takeaway

  • A deductible is the amount of money you pay each year before your insurance plan kicks in.
  • Different plans have different deductible amounts.
  • A high-deductible plan typically benefits someone who is young, in good health, or doesn’t need medical services often.
  • A low-deductible plan may be best for a person who is older, has a chronic illness, or requires frequent doctor’s visits.
EDITORIAL SOURCES
Everyday Health follows strict sourcing guidelines to ensure the accuracy of its content, outlined in our editorial policy. We use only trustworthy sources, including peer-reviewed studies, board-certified medical experts, patients with lived experience, and information from top institutions.
Resources
  1. What is the difference between a deductible, copay, coinsurance and out of pocket maximum? City of Mayfield Heights.
  2. How to Pick a Health Insurance Plan. Healthcare.gov.
  3. Family Health Insurance Deductibles. Cigna Healthcare.
  4. What Is a Health Insurance Premium? Healthinsurance.org.
  5. Copay, Coinsurance, and Out-of-Pocket Maximum. United Healthcare.
  6. Do you know the difference between a copay and coinsurance? Texas Department of Insurance. April 17, 2025.
  7. Your Total Costs for Health Care: Premium, Deductible & Out-of-Pocket Costs. Healthcare.gov.
  8. What Is a Deductible? Definition and How it Works. MetLife. September 26, 2022.
  9. What’s a Deductible? United Healthcare.
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Sarah Goodell, MA

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Sarah Goodell is a health policy consultant with over 25 years of experience. She is currently working as an independent consultant focusing on the Affordable Care Act, Medicare, health financing, and health delivery systems.

She previously served as director of the Synthesis Project, funded by the Robert Wood Johnson Foundation. At the Synthesis Project she managed projects on a variety of topics, including risk adjustment, Medicaid managed care, hospital consolidation, the primary care workforce, care management, and medical malpractice.

Prior to her work as a consultant, Ms. Goodell spent five years as a policy analyst in the Office of the Assistant Secretary for Planning and Evaluation (ASPE) at the U.S. Department of Health and Human Services. Her work at ASPE focused on private insurance and patient protections, including external appeals processes and privacy.

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Julie Marks is a freelance writer with more than 20 years of experience covering health, lifestyle, and science topics. In addition to writing for Everyday Health, her work has been featured in WebMD, SELF, Healthline, A&E, Psych Central, Verywell Health, and more. Her goal is to compose helpful articles that readers can easily understand and use to improve their well-being. She is passionate about healthy living and delivering important medical information through her writing.

Prior to her freelance career, Marks was a supervising producer of medical programming for Ivanhoe Broadcast News. She is a Telly award winner and Freddie award finalist. When she’s not writing, she enjoys spending time with her husband and four children, traveling, and cheering on the UCF Knights.

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