What is a Deductible?

Mike Merucci

| 2 min read

Mike Merucci is a corporate communications intern at Blue Cross Blue Shield of Michigan. He is a rising senior at Michigan State University, where he studies advertising and copywriting. At MSU, he works for Impact 89FM as an entertainment journalist and radio DJ.

One of the first steps in understanding your health insurance is learning what a deductible is. Deductibles are built into nearly every insurance policy, and we’re all bound to pay them eventually, so it’s important to know what they are and how they work.
Think of a deductible as an entrance fee. But, instead of entering an amusement park or museum, you’re entering better healthcare benefits and lower costs.
In health insurance, a deductible is the amount of money you have to pay for medical services on your own before your insurance policy will start to help with payments.
So, let’s say your policy has a $500 deductible: This means you’ll be paying for medical care yourself until you reach the $500 mark. Once you’ve paid off this deductible amount, then your insurance company begins to chip in. They’ll cover a portion of your medical costs until your deductible resets the next year.
You pay toward one health insurance deductible each year. So, each time you visit the doctor, your payment goes toward that deductible until it’s paid off. For family insurance plans, each family member has their own deductible. There is also a deductible representing the whole family, but that’s usually paid off through each family member’s deductible payments.
Deductible prices are determined on a case-by-case basis, so not everyone will have the same one. Generally, if your policy has higher monthly payments — also known as premiums — then it will have a lower deductible. If your policy has lower monthly payments, then it will have a higher deductible.
Deductibles have a lot of dimensions to them, but here’s a quick summary:
  • A deductible is how much money you pay for medical services on your own before your health plan starts chipping in.
  • You pay toward one health insurance deductible each year.
  • Deductibles vary in price. Not everyone receives the same one.
  • Higher monthly payments = lower deductible
  • Lower monthly payments = higher deductible
Want to read more health insurance guides? Give these a look:
Photo credit: Getty Images

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