What component of a health insurance policy indicates how much the insured must pay out-of-pocket before the insurance kicks in?

The deductible is a fundamental component of a health insurance policy, representing the amount that the insured must pay out-of-pocket for covered healthcare services before the insurance company begins to cover its share of the costs. For example, if an individual has a deductible of $1,000, they must incur $1,000 in qualifying medical expenses before their insurance starts to pay for additional costs. This feature is designed to share the financial responsibility between the insured and the insurer, encouraging individuals to be mindful of their healthcare expenses and reducing unnecessary claims.

The other components, such as the premium, copayment, and coinsurance, serve different roles within the insurance framework. The premium is the amount paid periodically to maintain the insurance coverage. A copayment is a fixed cost the insured pays for specific services at the time of care, while coinsurance refers to the percentage of costs that the insured is responsible for after the deductible has been met. Understanding these differences is essential for navigating health insurance policies effectively.