Deductible
Deductibles are typically used to deter the large number of claims that a consumer can be reasonably expected to bear the cost of. By restricting its coverage to events that are significant enough to incur large costs, the insurance firm expects to pay out slightly smaller amounts much less frequently, incurring much higher savings. As a result, insurance premiums are typically cheaper when they involve higher deductibles. For example, health insurance companies offer plans with high premiums and low deductibles, or plans with low premiums and high deductibles. One plan may have a premium of $1,087 a month with a $6,000 deductible, while a competitive plan may have a premium of $877 a month with a $12,700 deductible. The consumer with the $6,000 deductible will have to pay $6,000 in health care costs before the insurance plan pays anything. The consumer with the $12,700 deductible will have to pay $12,700.
Transgender rights in the United States
IRS Publication 502 lists medical expenses that are tax-deductible to the extent they 1) exceed 7.5% of the individual's adjusted gross income, and 2) were not paid for by any insurance or other third party. For example, a person with $20,000 gross adjusted income can deduct all medical expenses "after" the first $1,500 spent. If that person incurred $16,000 in medical expenses during the tax year, then $14,500 is deductible. At higher incomes where the 7.5% floor becomes substantial, the deductible amount is often less than the standard deduction, in which case it is not cost-effective to claim.