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An amount or period which must be deducted before an insurance payout or settlement is calculated.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


1. Able to be taken off of one's tax liability. See: Deduction.

2. In insurance, the amount that a policyholder must pay for a claim before the insurance company will make any payments at all. That is, if an insured event happens, the policyholder is responsible for covering damages up to a certain dollar amount, at which point the insurance company begins coverage. Some insurance policies have an annual deductible; that is, if two insured events happen in a given year, the deductible is only applied once. Other policies have a per event deductible; that is, the deductible applies each time a claim is made. Generally, the higher one's deductible is, the less one pays in premiums on the policy.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A deductible is the dollar amount you must pay for healthcare, damage to your property, or any other insurable claim before your insurance company begins to cover the cost of the bill.

For example, if you have a health insurance policy with an annual $300 deductible, you have to spend $300 of your own money before your insurer will pay whatever portion of the rest of the year's bills it has agreed to cover.

However, in some types of policies, the deductible is per event, not per year. Generally speaking, the higher the deductible you agree to pay, the lower your insurance premiums tend to be. However, the deductible for certain coverage is fixed by the insurance provider. That's the case with Original Medicare.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
An HDHP is a health plan that satisfies certain minimum annual deductibles and maximum annual out-of-pocket expense requirements under Sec.
Situation 4: The facts are the same as in Situation 1, except that the health FSA and HRA are post-deductible arrangements that only pay or reimburse medical expenses (including the individual's 20% coinsurance responsibility for expenses above the deductible) alter the minimum annual deductible of the HDHP is satisfied.
For example, if a taxpayer's MSA has an end-of-year balance of $2,750 and the health insurance policy annual deductible is $3,000, the individual can spend $950 without paying a penalty: $2,750 minus 60% of $3,000.
For employees living outside network areas, the annual deductible would be $150 for an individual, $300 for an individual and one dependent, and $450 for a family, with a 20'percent copayment for prescription drugs and most covered services and annual maximum out-of-pocket expenses of $1,500 for an individual, $3,000 for an individual and one dependent, and $4,500 for a family.
* Option 4 provides health care with no employee sharing of premium costs, but has a $1,500 annual deductible; an annual employee copayment of $3,000 per individual, plus 10 percent of the next $7,000 in expenses; and $10,000 maximum out-of-pocket expenses.

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