Aggregate Deductible

If you have health insurance, you probably have deductibles. (Deductibles show up in other insurance as well, but we'll stick to health coverage here.) With these, you are responsible for some expenses before your insurance company starts picking up the bill.

Say you have a $1,000 deductible. You have to pay the first $1,000 of health expenses. After you reach that point (at your $1,001st dollar of expense) the insurance provider begins chipping in some amount.

Family plans can have an aggregate deductible rather than a series of individual deductibles. In this system, the amounts for the deductibles aren't tracked on a person-by-person basis. Instead, a total amount exists for everyone covered. Once that total gets used up, the insurance company takes over.

So instead of a $1,000 deductible for you, $1,000 for your spouse and $1,000 for your Aunt Susie (who somehow shows up on your coverage), the plan includes an aggregate deductible of $3,000. Even if you spend $2,000 on some procedure, there's another $1,000 under the deductible that needs to get spent as a family before the insurance company begins to cover some of the expenses.