In health insurance, what does a deductible refer to?

A deductible in health insurance is defined as the amount that the insured must pay out-of-pocket for covered healthcare expenses before the insurance company starts to pay its share of the costs. This means that if an individual has a $1,000 deductible, they must pay that amount themselves for medical services before the insurer will begin to cover expenses.

This concept is essential because it establishes the initial financial responsibility of the policyholder, defining when the insurer's benefits begin. A correctly set deductible can influence the overall premium of a health insurance policy – typically, plans with higher deductibles may have lower premiums, while those with lower deductibles often have higher premiums.

The other options do not accurately describe what a deductible is. The total cost of insurance policies relates more to premiums rather than the deductible. The percentage of costs shared between the insurer and insured refers to coinsurance, not the deductible. Lastly, the out-of-pocket maximum denotes a cap on how much the insured will pay in a policy year, which is separate from the concept of a deductible. Understanding the role of a deductible is crucial for managing healthcare costs effectively.