How is a deductible defined in a medical expense policy?

• A. The monthly premium charged for coverage.
• B. The amount the insured must pay out-of-pocket for covered services before the insurer begins to pay its share.
• C. The total annual cap on benefits.
• D. A fixed dollar amount paid for each service by the insurer.

Answer: (B)

Deductible is the amount you must pay out-of-pocket for covered services before the insurer starts sharing the costs. It sets the initial patient responsibility each policy year. For example, with a $1,000 deductible, you pay the first $1,000 of covered charges yourself, and once that’s met, the plan begins to pay its portion (often through coinsurance or other cost-sharing) until you reach the out-of-pocket maximum. This is different from the monthly premium, which you pay regardless of use, and from the total annual cap on benefits, which is the maximum the insurer will pay in a year. A fixed dollar amount paid for each service by the insurer describes a copayment, not the deductible.