What does the term deductible refer to in health insurance?

The term deductible in health insurance specifically refers to the amount that the insured must pay out-of-pocket before the insurance company begins to cover the costs of medical claims. This concept is essential because it underscores the responsibility of the insured to bear some initial financial burden before benefits are activated.

For example, if a health insurance policy has a deductible of $1,000, the insured will need to pay the first $1,000 of their medical expenses. Only after that threshold is met does the insurer start to pay for covered services according to the terms of the policy. This mechanism serves multiple purposes, including discouraging unnecessary medical visits and helping control overall insurance costs.

The other options describe different aspects of insurance coverage but do not accurately reflect what a deductible is. The total amount of benefits (as mentioned in one of the other options) refers to the maximum benefits the insured can receive, while a limit on insurance coverage relates to maximum payout amounts, and the maximum cost for any single claim is not the same as the deductible concept.