What Is a Deductible? 
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What Is a Deductible?

What Is a Deductible?
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Updated on October 12, 2026
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A deductible is the amount of money you pay each year for healthcare before your insurance company starts to pay.

Until you meet your deductible, you are responsible for paying for your doctor’s visits or treatments, with some exceptions. Once you reach your deductible, your insurance company starts paying a portion of your covered expenses.

Your deductible can be high or low, depending on the type of plan you have. Your health plan’s deductible starts over each year, and the amount you owe may change annually.

How Does a Deductible Work?

When you pick a health insurance plan, you will choose your deductible. For example:

  • If you have a $2,000 deductible, you will have to pay $2,000 out of pocket before your insurance contributes to your bills.
One exception to this rule is that your insurance company will usually cover preventive services, like screenings and immunizations, without requiring you to meet your deductible.

Deductible amounts can vary a lot, depending on your plan. If your plan covers more than one person, you may have both an individual deductible (the amount one person has to meet) and a family deductible (the amount the whole family has to meet). You may also have a deductible for prescription drugs separate from your deductible for medical services.

Will I Have to Pay Any Costs After Reaching My Deductible?

You will still have some costs after you meet your deductible, depending on your plan’s cost-sharing requirements.

Premium Payments

Premium payments are what you pay, usually monthly, to keep your health insurance active. You must pay your premium, whether or not you use any healthcare services. Premium amounts vary, depending on your plan, where you live, whether you use tobacco, and your age. You will continue to pay your premium payments after you meet your plan’s deductible.

Copays

Many health insurance plans have copays. These are fixed payments you make each time you receive a medical service. For example, you might owe a $20 copay every time you have a doctor’s visit or get a prescription filled.

Sometimes, copays go toward your deductible, but most times, they do not. You will usually have to pay a share of your covered expenses until you reach your out-of-pocket maximum. In-network copays usually count toward your out-of-pocket maximum.

Coinsurance

Coinsurance is the percentage of the allowed amount for a covered service that you pay after you reach your deductible. An 80/20 coinsurance split is a common coinsurance. This means the insurance pays 80 percent of the bill, while you pay 20 percent.

Out-of-Pocket Maximum

Your out-of-pocket maximum is the most that you will pay for in-network covered medical expenses in a year. Once you reach this amount, your insurance company will pay 100 percent of your costs for the rest of the year, with the exception of your premium. Premiums do not count toward your out-of-pocket maximum.

Your deductible counts toward your out-of-pocket maximum, so when you pay your deductible, you are closer to reaching your max.

 Here’s an example of how your deductible, coinsurance, and out-of-pocket maximum work.
  • Let’s say your health insurance plan has a $1,000 deductible, a 20 percent coinsurance and a $4,000 out-of-pocket maximum. You have surgery, and the bill is $10,000. You will pay the first $1,000 to reach your deductible. Then, you will split the remaining $9,000, with your insurance company paying $7,200 and you paying $1,800. You have now paid a total of $2,800 toward your out-of-pocket maximum. Once you pay another $1,200 toward other covered expenses during the year, your insurance company will pay 100 percent of any other covered expenses.

How Does a Deductible Differ for In-Network vs. Out-of-Network?

Your deductible amount may depend on whether you use:

  • In-Network Care You go to doctors or hospitals that work with your insurance.
  • Out-of-Network Care You see providers that don’t work with your insurance. Usually out-of-network care doesn’t count toward your out-of-pocket maximum. Under the No Surprises Act, out-of-network emergency care is billed at in-network cost-sharing.

You may have separate deductibles for in-network and out-of-network services. If this is the case, your out-of-network deductible is usually higher.

Is It Better to Choose a Low-Deductible or High-Deductible Plan?

It depends on your budget and your health needs. High-deductible plans often come with a lower monthly premium and a higher out-of-pocket maximum. On the other hand, low-deductible plans have higher premiums and lower out-of-pocket maximums.

If you’re young and healthy, a high-deductible plan may be a better option. But if you have health concerns and want your coverage to kick in quickly, a low-deductible plan may be preferable.

Here are some factors to consider when choosing a deductible plan.

A high-deductible plan may be a better option if you
A low-deductible plan may be a better option if you
Are young and in good health
Are older or have a chronic medical condition
Don’t visit your doctor often
Visit your doctor frequently
Don’t need prescription drugs
Need expensive prescription drugs
Aren’t planning to become pregnant
Plan to become pregnant in the next year
Are financially able to cover out-of-pocket medical expenses if something unexpected happens
Need assistance covering out-of-pocket expenses if something unexpected happens

What Is an Aggregate Deductible?

An aggregate deductible is one big deductible that your whole family has to meet together before your insurance covers costs. With an aggregate deductible, it doesn’t matter who spends what. It’s the combined bill that counts. Once the aggregate deductible is met, the plan starts paying its share of the costs for all the family members.

What Is an Embedded Deductible?

With an embedded deductible plan, insurance will cover costs once:

  • A single family member reaches their individual deductible or
  • The family deductible is reached
Essentially, each family member has their own deductible within the family plan. If a single individual within the family reaches their deductible, the insurance company contributes to paying costs for just that person. Once the family deductible is met, the plan starts paying its share of the costs for everyone.

Resources We Trust

EDITORIAL SOURCES
Everyday Health follows strict sourcing guidelines to ensure the accuracy of its content, outlined in our editorial policy. We use only trustworthy sources, including peer-reviewed studies, board-certified medical experts, patients with lived experience, and information from top institutions.
Resources
  1. How to Pick a Health Insurance Plan. HealthCare.gov.
  2. Deductible. HealthCare.gov.
  3. How Insurance Companies Set Health Premiums. HealthCare.gov.
  4. Understanding Copays. UnitedHealthcare.
  5. Understanding Copays, Deductibles, and Coinsurance. Cigna.
  6. Know Your Medical Bill Rights When Using Insurance. CMS.gov.
  7. What Is a Deductible? UnitedHealthcare.
  8. Family Health Insurance Deductibles. Cigna.
  9. Embedded Deductibles: Source of Consumer Confusion. Center on Health Insurance Reforms.
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