What is the difference between a "premium" and a "deductible"?

The distinction between a "premium" and a "deductible" is important for understanding health insurance payments. A premium is the amount of money that an individual or employer pays for an insurance policy, typically on a monthly basis. This payment secures coverage and keeps the policy active, regardless of whether or not any healthcare services are used.

In contrast, a deductible refers to the amount that an insured person must pay out-of-pocket for healthcare services before the insurance company starts to pay. The deductible must be met before the insured can begin to receive benefits for covered medical services, which makes it a separate financial obligation from the premium.

Understanding this difference helps individuals manage their healthcare costs effectively. The premium ensures that the policy is in effect, while the deductible is a threshold that must be reached before the benefits of that policy are accessible. Together, these terms define the financial structure of health insurance coverage.