Insurance
What is Deductible?
A deductible is what you pay out of pocket before your insurance kicks in. Higher deductibles mean lower monthly premiums. In health insurance, under IRS regulations, to qualify for a Health Savings Account (HSA) in 2026, a High Deductible Health Plan (HDHP) must have a minimum deductible of $1,700 for self-only coverage or $3,400 for family coverage. Deductibles contribute toward the plan's annual out-of-pocket maximum.
In property and casualty insurance (such as auto or homeowners insurance), choosing a higher deductible reduces the insurer's risk, which lowers the policy's premium. Conversely, lower deductibles result in higher premiums because the insurer assumes a larger share of early loss costs.
Quick Facts
PRACTICAL EXAMPLE
Your auto insurance has a $500 deductible. You get in an accident and the damage comes to $2,500. You pay $500, and your insurance covers the remaining $2,000.
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