What Is a Deductible in Health Insurance? What You Pay Before Coverage Begins

Your health insurance deductible is the amount you must pay out of pocket for medical services during a policy year before your health insurance plan starts to cover costs. Monthly premiums, copays and coinsurance do not count toward your deductible.

Read on to learn how deductibles affect your monthly health insurance costs — and which deductible amount might be best for your needs.

On This Page

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  How Do Health Insurance Deductibles Work?

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  What Costs Count Toward a Deductible?

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  Does Every Health Care Plan Have a Deductible?

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  What Kinds of Health Insurance Deductibles Are There?

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  What Are High-Deductible and Low-Deductible Health Plans?

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  How Do I Know What Health Insurance Deductible Amount To Choose?

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  FAQs

How Do Health Insurance Deductibles Work?

Health insurance plans generally require you to pay 100% of the costs for most types of medical care out of pocket before you reach your deductible. Every time you receive a covered health care service and pay for it, it will count toward your deductible amount. After meeting your deductible, you may only have to pay a copay or coinsurance each time you receive care until you hit your out-of-pocket maximum — after which, your health insurer will cover 100% of the costs.

For example, suppose your plan has a $2,000 deductible and a 20% coinsurance requirement for hospital stays. If you get a bill for $10,000 after a brief hospital stay at the start of the year, you will have to pay the first $2,000 out of pocket, followed by 20% of the remaining $8,000 — which comes out to $1,600. Then, your health insurance company would cover the last $6,400.

Your deductible will reset whenever your plan is renewed, which generally occurs at the beginning of each year.

The Affordable Care Act (ACA) requires health insurance plans to fully cover certain in-network preventive services — even if you haven’t met your deductible. Examples of fully covered preventive care include vaccines, alcohol counseling, diabetes screenings and fall prevention therapy for certain elderly adults.^[1]

How Much Is a Typical Deductible?

The average health insurance deductible for a plan purchased through the Health Insurance Marketplace is $2,789. However, deductibles vary by metal tier. For example, bronze plans — which have the lowest monthly premiums — have an average deductible of $7,186, while gold plans — which have higher premiums and lower out-of-pocket costs — have an average deductible of $1,403.^[2]

What Costs Count Toward a Deductible?

In general, the amount you spend on any service that is covered by your health plan should count toward your deductible. Below are examples of specific medical expenses that enable you to chip away at your annual health insurance deductible:^[3]

• Hospital bills
• Surgeries
• Laboratory services
• MRI or CT scans
• Anesthesia
• Doctor and therapist visits
• Medical equipment, like pacemakers

Conversely, your premiums and out-of-pocket health care costs — assuming you would have to pay a copay before reaching your deductible — typically do not count toward your deductible. In addition, it won’t count toward your deductible if you pay for a medical service that isn’t covered by your health plan.^[3] Common health insurance exclusions include LASIK eye surgery, travel vaccines, cosmetic surgery, weight-loss programs and dental or vision services for adults.^[4]

Does Every Health Care Plan Have a Deductible?

While the majority of health care plans require you to meet a deductible, some insurance companies offer no-deductible options. However, you should note that zero-deductible plans are usually expensive. This type of coverage may make sense if you have a chronic illness that requires frequent treatments and would rather budget for high monthly premiums, knowing you have consistent coverage for potentially unpredictable health care expenses.^[5]

What Kinds of Health Insurance Deductibles Are There?

Your health insurance plan may come with multiple different deductibles, depending on the types of health care services you receive, where you receive care and whether your plan provides individual or family coverage.

Service-Based Deductibles

Some health plans have separate deductibles for different health care services — specifically, medical care and prescription drugs.^[6] For example, suppose you have a $1,000 medical deductible and a $250 prescription deductible. You may reach your medical deductible after a single emergency room (ER) visit, but you could still have to pay for the medicines you regularly take out of pocket until you have spent $250 on prescriptions for the year.

Network-Based Deductibles

Your health plan may also have two separate deductibles for in-network and out-of-network health care.^[6] Some insurance companies don’t cover routine care unless the provider is part of your plan’s network, so the out-of-network deductible may not be relevant for most medical services, depending on the type of plan you have.

However, all health plans must cover emergency care — even if the provider is not in network — so your second deductible could still apply for an out-of-network ER visit.^[7]

Member-Based Deductibles

Two different deductibles may apply if your plan includes coverage for your entire family. Some plans may only include an aggregate deductible that applies to the whole family, meaning no one receives coverage for any medical services until the full aggregate deductible has been met. It also means that one person could meet the deductible on their own and unlock coverage for the entire family.^[6]

Meanwhile, some family plans include both aggregate and embedded deductibles, with each individual family member having their own embedded deductible. In this case, health care services count toward both deductibles; however, an individual may reach their embedded deductible and unlock coverage for themselves before the rest of the family. Of course, if you have an individual plan, you will only have a single member-based deductible.^[6]

What Are High-Deductible and Low-Deductible Health Plans?

As their names suggest, high-deductible health plans (HDHPs) and low-deductible health plans (LDHPs) differ based on how much they require you to pay out of pocket before cost sharing takes effect. HDHPs charge lower premiums in exchange for requiring you to pay more out of pocket before your treatments are covered. Conversely, LDHPs are expensive when it comes to premiums, but they don’t require you to pay as much before your coverage begins.

In 2025, a plan may qualify as an HDHP if it has a deductible ranging from $1,650 to $8,300 for individual coverage or $3,300 to $16,600 for family coverage.^[8] Any plan with a deductible below $1,650 for individuals or $3,300 for families may be considered an LDHP. Of course, you should remember that you may be able to secure a deductible as low as $0, depending on your insurance carrier.^[5]

Which Is Better?

LDHPs may be beneficial for people with significant health care needs, such as individuals with chronic illnesses or elderly people who take expensive prescription medications and regularly visit specialists. However, HDHPs may be the better option for young and healthy individuals who don’t expect to require regular medical care and simply want affordable coverage in case of an unexpected injury or illness.

How Do I Know What Health Insurance Deductible Amount To Choose?

Choosing a health care deductible is a crucial decision, as it will determine the amount you must pay for health insurance each month. Here are some key factors to consider when deciding what deductible amount to choose:

1. Health needs: If you expect to need frequent medical attention due to a chronic condition or other ongoing health issue, a lower deductible may be a better option for you, as it will reduce your out-of-pocket expenses when you access care.

2. Budget: Consider your monthly budget and what you can afford in terms of monthly premiums and out-of-pocket expenses. An HDHP may be appealing due to its lower monthly premiums; however, you should consider whether there is room in your budget for a large deductible in the event of an accident or a significant health scare.

3. Emergency fund: Before selecting a plan with a high deductible, ensure you have a sufficient emergency fund to cover the deductible in case of an unexpected medical expense.

4. Prescriptions: Even if you don’t expect to need many visits with medical professionals, a plan with a low drug deductible may still be appealing if you take numerous high-cost prescription medications.

5. Subsidies: Individuals who qualify for Marketplace subsidies should make sure they enroll in plans that are compatible with those subsidies. In particular, you must select a silver plan with a moderately high deductible to qualify for cost-sharing reductions — which will then allow you to lower your deductible.^[9]