Home › Finance › Health & Medical Insurance › deductible

deductible

dih-DUK-tuh-buhl /dɪˈdʌktəbəl/

nounadjectiveB2GMATSATACT

formalprofessionalfinancial

The specific amount of money that an insured person must pay out-of-pocket for healthcare services before their insurance plan begins to pay.

The deductible resets annually. Preventive care is often covered 100% by insurance even before you meet your deductible, but other services require you to pay the full contracted rate until this threshold is reached.

The story behind the word. From the Latin 'deducere', meaning 'to lead down' or 'pull down' (from 'de-' meaning down, and 'ducere' meaning to lead). In financial terms, it refers to an amount that is 'pulled down' or subtracted from the total liability of the insurance company.

Word relationships

threshold: Threshold is a general term for a starting point, whereas deductible is the specific financial threshold in an insurance policy.

Commonly confused with

copayment: A deductible is a large cumulative threshold you must meet annually, while a copayment is a small, flat fee paid at each individual visit.

Word family

deduct (verb): To take away or subtract an amount from a total.
deduction (noun): The act of subtracting, or an amount that is subtracted.

Collocations

annual deductible
meet the deductible
high-deductible plan
individual deductible

Example sentences

"Under a high-deductible health plan, individuals must pay several thousand dollars of their own medical bills before the insurer contributes a single dollar." A guide explaining high-deductible health plans.
"Because the new calendar year began, her deductible reset to zero, meaning she had to pay for her physical therapy sessions in full once again." An explanation of how deductibles reset.

Memory hook

Think of 'deductible' as the amount that must be 'deducted' from your own bank account before the insurance company starts paying. You must pay the deductible before they deduct your costs.

When not to use

Do not use 'deductible' to refer to a flat fee paid at the doctor's office; that is a copayment.

Fun facts

The concept of a deductible was popularized in auto and property insurance in the early 20th century before becoming a standard feature of modern health insurance plans.