In health insurance, what is a deductible and how does it affect premium and out-of-pocket costs?

• A. A deductible is the amount the insured pays before benefits start; higher deductibles generally reduce premiums but increase out-of-pocket costs.
• B. A deductible is the monthly fee charged to maintain coverage.
• C. A deductible is a fixed monthly charge to access benefits.
• D. A deductible is the fixed percentage of medical costs charged after the deductible is met.

Answer: (D)

The deductible is the amount you must pay out-of-pocket for medical care before your health plan starts paying benefits. Plans with higher deductibles generally have lower monthly premiums, but you’ll pay more out-of-pocket before benefits kick in. After you meet the deductible, you’ll typically share costs through coinsurance or copays, and your insurer covers a larger portion until you hit the out-of-pocket maximum. The option describing a fixed percentage after meeting the deductible is referring to coinsurance, not the deductible itself. The options describing a monthly fee or fixed monthly charge are describing the premium, not the deductible.