In health insurance, what does the term 'deductible' refer to?

In health insurance, the term 'deductible' refers to the out-of-pocket expense that a policyholder must pay before their insurance coverage begins to pay for any medical expenses. Essentially, it sets a threshold that the insured is required to meet in terms of expenses for services, treatment, or prescriptions before the insurer starts to cover costs.

For example, if a health insurance policy has a deductible of $1,000, the insured must spend that amount on qualifying medical expenses before the insurer contributes to future costs. This means that the deductible functions as a way for insurers to manage costs and encourage policyholders to take some responsibility for their medical expenses.

In contrast, while the total amount covered by the insurer pertains to the overall policy limits, it does not define the deductible's role. The percentage of costs shared by the insured relates to coinsurance, not the deductible. Lastly, the maximum limit of coverage refers to the cap on what the insurer will pay over the life of the policy, which is separate from the concept of a deductible. Thus, option B most accurately captures the essence of what a deductible in health insurance means.