What Is an Annual Deductible for Health Insurance?

Many health insurance plans require policyholders to pay at least a portion of covered expenses out of their own pocket. One cost incurred by the policyholder is known as an annual deductible.

Identification

• An annual deductible is the dollar amount the policyholder must pay out of her own pocket during the year for medical expenses before coverage begins. For example, if the policy includes a $500 deductible, the sum of the policyholder's annual medical expenses must reach that level before the coverage kicks in.

Individual And Family Deductibles

• Some health insurance policies have an individual as well as a family deductible. If a plan offers an annual deductible of $1,000 for an individual and $2,500 for a family, the deductible for one person is satisfied when his total medical expenses reach $1,000. If other family members incur an additional $1,500 in medical expenses, the deductible for the entire family has been met for the year.

Considerations

• The deductible amount will have a direct impact on the premium the policyholder pays. The lower the deductible the policyholder selects, the higher the premium will be, although she will also need to pay less in medical expenses out of her own pocket.