What is described as a specified amount of money that must be paid before an insurance company covers a claim?

A deductible is defined as a specified amount of money that an insured must pay out of pocket before an insurance company starts to cover claims. This mechanism is designed to prevent small or minor claims from being processed, encouraging the insured to share some of the financial responsibility for their healthcare costs. When the insured reaches their deductible, the insurance company will then begin to pay their portion of the covered expenses, which is often subject to further cost-sharing mechanisms such as copayments or coinsurance.

In this context, a premium refers to the amount paid periodically to maintain an insurance policy but is not related to the fulfillment of costs associated with claims. Coinsurance is a cost-sharing arrangement where the insured pays a percentage of the costs after the deductible has been met rather than a fixed amount. The out-of-pocket maximum is the total capped amount that an insured will pay during a policy period, encompassing deductibles, copayments, and coinsurance, beyond which the insurance covers 100% of expenses. Each of these terms defines distinct aspects of the financial responsibilities within insurance plans, but the deductible specifically addresses the threshold that must be met before insurance coverage kicks in for claims.