It is important to understand how deductible works in health insurance when choosing the right health plan for you and your family. You may have come across the terms deductible health insurance and got confused about what they really meant.
A deductible health insurance is the amount you pay for insurance-covered health care expenses before your insurance company begins to pay.
For example, if your deductible is $500 and your hospital stay expenses amount to $2000, you will pay $500 only from your pocket before your health insurance provider steps in and pays the remaining $1500. Basically, the deductible is the amount of money deducted from the total insured cost.
Deductibles work differently in health insurance. When you meet your annual deductible, the health insurance provider requires you to pay a coinsurance (another form of cost sharing) until you reach your out-of-pocket maximum. Then the insurance company steps in and 100% of the remaining cost. Usually, the out-of-pocket maximum amount does not exceed 50% of the insurance policy.
A deductible in health insurance is applied annually, because it is hard to limit the number of times you visit a doctor. It can either be a fixed amount of dollars or a percentage of the total cost of insurance depending on the policy.
It is way cheaper to have deductible health insurance. Normally, insurance companies negotiate discounted rates with the insurance providers. It means that the annual deductible you pay from your pocket will be a discount. This significantly reduces the overall medical costs.
A deductible health insurance is classified according to the amount of deductible you pay. Also, the deductible you pay determines the amount of premiums that you must pay monthly. It consists of a high-deductible and low-deductible insurance plan.
The high-deductible plan is characterized by a huge amount of deductible and lower premiums. When you choose this plan, you will be responsible for most of your medical expenses. The insurer will save a lot of money because they will pay a small percentage of the total insured medical costs. You will also benefit by paying lower monthly premiums. Some people may find this deductible to be immense and unaffordable.
With a low-deductible plan, the out-of-pocket amount is lower but the monthly premiums will be much higher. It is a suitable health plan for people with young families or those who need to see the doctor more frequently. For example if you suffer from a chronic illness.
Deductible health insurance differs from other insurance plans such as auto and homeowners insurance. They only compensate you for damages after you have paid the deductible.
Most health insurance companies provide benefits to their customers without having to pay the deductible at all. Also, all marketplace insurance plans cover preventive care such as immunization, prescription pills and others without requiring you to pay a deductible.
This information will help you decide which health plan is appropriate for you. Finally, it is advisable that you choose a deductible that you can afford.