When you buy a car, health, home, or any other type of insurance policy, the price you pay is the premium. The premium covers a stated amount of coverage for a specified risk.
However, you may need to pay out-of-pocket before your insurer reimburses you in an unexpected event like a car accident or home fire. These payments are known as deductibles.
The deductible in health insurance is an amount the insured person must pay before the insurer begins to reimburse them for expenses.
A deductible can apply to any insurance policy (such as car, health, home, and life insurance), and it serves as an example of what could happen if the insured party has a claim against them.
So, let’s find out how health insurance deductible work by answering some common questions revolving around how they work.
What is a deductible?
A health insurance deductible is the amount an individual must pay out-of-pocket before their insurer starts to cover their expenses. You can think of it as an upfront fee or a payment you must make before receiving any reimbursement for your medical bills.
Health care costs are rising, which is why most health insurance plans have a deductible. Deductibles are intended to give people a “skin in the game” and encourage them to be careful about their health care spending.
Your deductible is the amount you must pay before your health insurance kicks in. For example, if you have a $2,000 deductible, you will pay the total amount of any covered healthcare services that cost up to $2,000 before your insurance company begins to pay.
Deductible can vary depending on the type of health insurance plan you choose. Knowing what types of health insurance deductible exist will help you understand how they work and help you find the right plan for you and your budget.
How does health insurance deductible work?
Health insurance plans are designed to help people manage the cost of health care throughout their lives. However, with health insurance, you are expected to pay a certain amount out-of-pocket each year before the health insurance company starts paying your bills.
This amount is your health insurance deductible. Health insurance deductibles are a specified amount you must pay each year before your health insurance company starts paying your bills.
For example, if you have a $1,000 deductible, it means your health insurance company will not begin to cover your medical bills until you have paid $1,000 for covered healthcare services
When you buy health insurance, you select a plan with a deductible. Health insurance plans with higher deductibles are generally less expensive than those with lower deductibles. If you choose a health insurance plan with a high deductible, you will pay fewer monthly premiums but more out-of-pocket for your health care each year.
How much is the deductible for health insurance?
Health insurance deductible vary significantly by plan and company. But generally, the higher your deductible, the lower your premiums will be. It’s essential to understand what your specific deductible is before purchasing a health insurance plan.
Health insurance companies calculate deductible as a percentage of the total out-of-pocket costs for a year. For example, if your health insurance plan’s deductible is $1,200 for an individual, you will likely have to pay that amount yourself before the insurance company starts paying your bills.
If you have a family plan, the insurance company may have a different deductible (typically higher) for each person.
Is there more than one deductible?
Yes, deductibles are often set by the type of service. For example, your health insurance plan may have a separate deductible for in-network medical care, prescription drugs, and mental health care.
Some health insurance plans may even have a separate deductible for certain conditions, such as cancer or diabetes. Again, the specific deductibles and terms will vary between plans. But most plans will have different deductibles for in-network care, out-of-network care, and prescription drugs.
Will I always have to pay a deductible?
Health insurance deductibles are required for nearly all health insurance plans. It means that you will have to pay the total amount of your deductible before the health insurance company starts paying your expenses.
There are, however, a few instances where you may not have to pay your health insurance deductible. For example, some plans offer an “Initial Preventive Physical Exam” (IPPE), which waives your deductible during the first year of coverage.
Depending on your plan, you may also be able to get some of your deductible waived if you go through the health insurance company’s appeal process.
Can I choose how much my deductible will be?
Health insurance deductibles can sometimes be negotiated when you’re purchasing a plan. As an adult, you may also be able to negotiate a higher deductible, but only if you have the money set aside to pay it out-of-pocket.
If you have a chronic health condition, you may be able to get a health insurance plan with a lower premium and a higher deductible. This way, you can get coverage at a lower price without choosing a plan with a high premium. However, if you choose a higher deductible, ensure you have the money set aside to pay it out-of-pocket.
Conclusion
Deductibles are a crucial part of any health insurance plan. They ensure that only the most severe health conditions are treated while keeping monthly premiums low. While they can seem intimidating at first, they are pretty simple once you break them down. A health insurance plan with a high deductible will likely have lower monthly premiums than a plan with a lower deductible.
Likewise, a plan with a low deductible will likely have higher monthly premiums than other types of health insurance plans. Understanding your health insurance plan’s deductible can help you save money on monthly premiums and select the best plan for your health and budget.
