Kalamazoo-area Individual Health Insurance Plans, Medicare, and Group Benefits.


What is a Deductible and How Does it Work?

Insurance plans have many aspects to understand. One of the most important terms to know is “deductible.” You’ve probably heard and used that word before, but don’t understand completely how it works.

A deductible is simply the out-of-pocket amount before your insurance coverage kicks in. As your deductible can greatly affect your overall costs, it’s important to understand how it works.

Your deductible is based on your benefit period which is typically a calendar year. The higher your deductible, the lower your premium after you meet that amount and your insurance benefits kick in.


  • Terry has a medical plan with a $500 deductible.
  • Terry breaks his arm while running and must visit the emergency room.
  • After the exams, X-rays, and brace, the total cost is $1,700.
  • Terry’s medical insurance plan covers 75% of the expenses. So, he must cover the additional 25% of the coinsurance.

Let’s break it all down: the total cost of the ER visit was $1,700. Once Terry pays the $500 deductible, the insurance will then pay 75% of the remaining $1,200 balance. This will leave Terry with a $300 balance he is responsible for, leaving him with a total cost of $800. Although it costs Terry $800, he has now met his deductible, and any expenses incurred for the rest of the year will be paid at 75% until his out-of-pocket maximum is met.

We hope this helps clarify things for you when considering your health insurance. We are always here to answer questions. Contact us if you’d like to discuss the best benefit plan for you.