A deductible is the amount of money you have to pay out of pocket for medical expenses before your health insurance company pays its share.

Each health insurance policy has different terms, but, generally speaking, the higher the deductible, the lower your premium. Depending on the plan, a deductible can range from $100 to several thousand dollars. If your plan has a high deductible, you might be required to pay the first $1,000 for medical services before your health insurance plan begins covering your medical expenses. Deductibles typically apply for one calendar year. This means that after 12 months you will have to meet your deductible again—even if you paid the full amount in the prior year—before your plan provides coverage for your medical expenses. Some health care plans, however, allow you to take advantage of certain services like doctor visits before you pay the full amount of your deductible.

Some health care plans also may require you to pay coinsurance—a percentage of covered medical expenses that you must pay in addition to your deductible. For example, if your plan covers 80 percent of covered medical expenses, you might have to pay the remaining 20 percent until you reach a maximum out-of-pocket dollar amount. Therefore, if you have coinsurance, a $1,000 deductible, and a $5,000 medical bill, you would pay $1,000 for your deductible and 20 percent of the remaining $4,000 from the bill, or $800, for a total out-of-pocket expense of $1,800.

While the monthly savings for higher deductible plans can be substantial, it is important to determine whether you can afford the initial out-of-pocket expenses. For example, if you have a $2,000 deductible and you have to have emergency surgery, you might have to pay the full amount for the medical procedure upfront. If you cannot afford such a large expense, you might want to consider a plan with a lower deductible. You can learn more at Medical News Today.