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Key points

  • A health insurance deductible is how much you pay for health care services before your insurance kicks in to cover at least a portion of the costs.
  • The amount of your deductible can affect your health insurance premiums and out-of-pocket costs.
  • The average deductible for a single person in an employer health insurance plan is $1,735.

What is a health insurance deductible?

A health insurance deductible is how much you have to pay out of pocket each year before your health insurance starts to pick up a share of the costs. A deductible typically doesn’t apply to certain preventive services, which are free without any patient cost-sharing.

If your health insurance deductible is $2,000, for example, you’ll need to foot the bill for all the health care services covered by your plan — except eligible preventive services — until you reach that threshold. Once you hit your deductible, your health insurer will start covering its portion of your medical costs.

According to the latest data from the Kaiser Family Foundation, the average deductible for a single person in an employer health plan is $1,735.

How does a deductible differ from a copayment and coinsurance?

In addition to a deductible, you will have copayments or coinsurance (or both) with any health insurance policy. All three are out-of-pocket expenses you’re responsible for.

Copayments

Copayments (or copays) are a fixed dollar amount that you pay for a covered medical service, such as a doctor’s visit, after you’ve met your deductible.

Let’s say you have a $20 copay for doctor’s visits and your health insurance plan’s allowable amount for the office visit is $120. If you’ve already met your deductible, your out-of-pocket expense for the visit is $20. But if you haven’t met your deductible, you’ll pay the full $120.

Coinsurance

Coinsurance is the percentage of the cost of covered medical services you’re responsible for paying after you’ve met your deductible. You might pay your copayment amount at the office, then be responsible for the remaining coinsurance amount after your bill has been processed by the insurance company.

Let’s say you have a health insurance plan with a $2,000 deductible and 20% coinsurance. Your doctor charges $100 for an office visit. Since you haven’t yet met your deductible, you’ll have to pay the entire $100 bill. However, after you hit your deductible, you’ll pay 20% of the $100 visit, or $20, and your health insurance will cover the rest.

How do health insurance deductibles affect premiums?

In general, the higher your health insurance deductible is, the lower your monthly health insurance premiums will be. This is because you’re shouldering more of the initial cost of care yourself. Conversely, if you choose a health insurance plan with a low deductible, your monthly premiums will be higher because the health insurance company is covering costs sooner.

High-deductible health plans (HDHPs), which have even higher deductibles than traditional plans do — for 2024, the IRS defines HDHPs as any plan with a deductible of at least $1,600 for an individual and $3,200 for a family — are popular with consumers who want to keep their monthly premiums low. Plus, with an HDHP you can fund a health savings account (HSA) that lets you pay for eligible out-of-pocket health care expenses with pre-tax dollars.

Tip: With an HDHP in 2024, your total out-of-pocket expenses, including your deductible, copayments and coinsurance, cannot exceed $8,050 for an individual and $16,100 for a family. Once you reach that threshold, your insurer should cover the remainder.

If you’re considering an HDHP, be sure to factor in your expected medical costs for the year. You’ll need to pay all your expenses until you reach your deductible, which can strain your budget if you face unexpected health costs.

Keep in mind that health insurance deductibles are just one thing to consider when choosing a health plan. Other important factors include:

  • Your premium payments.
  • The type of coverage you need.
  • Your coinsurance amounts.
  • Whether your preferred doctors and hospitals are in-network.

How much can you expect to pay for health insurance in 2024? The cost of health insurance

When does a higher deductible make sense?

Before you opt for a plan with a high deductible in the hopes of saving money on health insurance, look at your previous year’s spending and how much care you expect to need in the upcoming year. Consider how often you tend to go to the doctor, fill prescriptions or receive any kind of medical treatment.

If you seldom see a doctor and don’t regularly take prescription medications, a higher deductible can make sense. You’ll have coverage in case of a medical emergency or serious injury, but your monthly premiums will be relatively low.

If, however, you have a chronic health condition, expect to make multiple doctor visits over the year or take prescriptions on a regular basis, you will likely pay more out of pocket with a higher deductible plan than if you had opted for a plan with a higher monthly premium and a lower deductible. Higher premiums will be offset by lower overall costs.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Kat Tretina

BLUEPRINT

For the past seven years, Kat has been helping people make the best financial decisions for their unique situation, from finding the right insurance policies to paying down debt. Kat holds certifications in student loan and financial education counseling, and her expertise lies in insurance and student loans. She has written about life and disability insurance, health insurance, pet insurance, loans and credit cards for a variety of publications, including the Buy Side from Wall Street Journal, Money, Reader's Digest, The Huffington Post, Forbes Advisor and more.

Mandy Sleight

BLUEPRINT

Mandy is an insurance writer who has been creating online content since 2018. Before becoming a full-time freelance writer, Mandy spent 15 years working as an insurance agent. Her work has been published in Bankrate, MoneyGeek, The Insurance Bulletin, U.S. News and more.

Heidi Gollub

BLUEPRINT

Heidi Gollub is the USA TODAY Blueprint managing editor of insurance. She was previously lead editor of insurance at Forbes Advisor and led the insurance team at U.S. News & World Report as assistant managing editor of 360 Reviews. Heidi has an MBA from Emporia State University and is a licensed property and casualty insurance expert.