What is the term for the amount you must pay before you start receiving benefits from your insurance company?

The amount you must pay before you start receiving benefits from your insurance company is known as the deductible. This is a specific dollar amount that is defined in your insurance policy. Until you have paid this amount out of pocket for covered healthcare services, your insurance plan will not contribute to your medical expenses.

For example, if your deductible is set at $1,000, you will need to incur $1,000 in eligible medical expenses before your insurance begins to cover additional costs. This arrangement helps manage risk for the insurer and can also encourage policyholders to seek necessary services while remaining mindful of costs.

Premiums are the regular payments made to keep an insurance policy active. Co-payments are fixed amounts you pay for certain services after your deductible has been met. Out-of-pocket maximum refers to the maximum amount you would have to pay for covered services in a policy period; after you reach this limit, the insurance covers 100% of the costs for covered services. Understanding these terms and their distinctions is crucial for effective financial planning in healthcare.