What is the purpose of a health insurance deductible?

The purpose of a health insurance deductible is that it represents the amount a policyholder must pay out of pocket for their healthcare expenses before their insurance starts to cover additional costs. This financial threshold ensures that the insured individuals contribute to their healthcare expenses, which helps to keep premiums more affordable for everyone. Once the deductible is met, insurance companies begin to pay their share of covered healthcare expenses.

This mechanism encourages policyholders to use healthcare resources more judiciously, as they are financially responsible for a certain amount of their care before insurance benefits kick in. Moreover, having a deductible can help insurers manage risk and ensure that individuals are somewhat financially invested in their own health care decisions.