When you go shopping for health insurance plan for yourself or family, you first need to understand what is meant by the term deductible. A health insurance deductible is the amount you pay for covered health care services before your health insurance begins to pay. It is a form of cost-sharing between you and your insurance company. Deductibles range from a few hundred to thousands of dollars depending on the insurance policy. Some insurance plans, normally H.M.O have zero amounts of deductibles.
Here is how health insurance deductible works: Let’s say your health care plan has a deductible of $1000 and you incur medical and pharmacy bills of $1500. You will be required to pay $1000 first from your pocket before your insurer comes in to settle the remaining $500.
In health insurance, deductibles apply in an annual basis. In most cases, after you pay your deductible for the year you will be needed to pay a coinsurance until you reach your out-of-pocket maximum, after which the insurer pays 100 percent of any additional medical costs. Normally, the out-of-pocket maximum doesn’t exceed 50% of the insurance policy.
Insurance companies provide discounted rates to their customers. Therefore, paying out of your pocket to meet your yearly deductible reduces the overall medical costs considerably.
There is a wide array of options in the market today, and confusion may arise when comparing the different deductibles. The following information is important when choosing the right health insurance plan.
A health insurance deductible differs slightly from other types of deductibles. Unlike, home, renters, or autoowners insurance where providers demand that you pay your deductible first before they pay for any claims, some medical insurance plans meet medical expenses before you pay your deductible. These plans meet costs for services like doctor visits and prescription drugs.
Health insurance plans are classified as high-deductible and low-deductible plans depending on the monthly premiums you pay. The more premium you pay, the lower the deductible and vice versa.
A high-deductible health plan means that you are responsible for a huge portion of your covered medical expenses but you will benefit by paying lower monthly premiums. The disadvantage is that meeting the deductible could be overwhelming to most people given the high costs of medical services. This plan is suitable for people who are generally healthy.
For a low-deductible plan, the amount you are required to meet before the insurer kicks in is much lower and affordable. But the premium paid for this plan is much higher. The deductibles are usually less than $3000 for both family and individual coverage.
In some cases e.g. preventive care, no deductibles are required at all. All marketplace plans cover preventive care such as shots, screening tests and others.
It is wise to find out beforehand what the insurance provider covers without needing you to pay a deductible when choosing a health insurance plan. You will then decide how you want to balance out the health insurance deductible and monthly premiums.