What’s a Deductible on Health Insurance?

What’s a deductible on health insurance? Get clear, easy to understand answers in this this straightforward guide with exactly what you need to know.

In 2018, more than 91 percent of Americans had some type of health insurance, but only a fraction of that number truly understands how their policies work. No matter what type of coverage you have, you’ll have to pay a deductible to your insurance company.

If you’re like most people, you’re probably asking yourself, “what’s a deductible, anyway?” You’re not alone.

Though deductibles are a standard feature of health insurance plans, they’re a bit confusing for people to figure out. Here’s what you need to know about this aspect of your health insurance coverage.

So, What’s a Deductible on Health Insurance, Anyway?

Health insurance deductibles work differently than other types of insurance deductibles. For example, when you file a claim with your auto insurance provider, you’re expected to pay the deductible up front anytime you file a claim.

That deductible will typically be a few hundred dollars and helps offset the cost of repairs for any damage your car suffers.

The deductible on your health insurance plan is the amount of money you pay out-of-pocket for the medical care you receive. However, the amount you pay doesn’t offset the amount your insurance provider pays. Instead, it’s what you’re responsible for before your insurance company will kick in and cover the rest of your treatment costs.

The exact amount varies based on the type of health insurance you have and the number of people on your plan. The more people you’re covering through an insurance policy, the higher your out-of-pocket expenses will be.

How It Differs From Co-Pays

Your deductible is your responsibility to pay in full. However, your insurance provider will still get you discounted treatment prices before you pay the full amount. They do this in part through a system of co-pay amounts.

The co-pay amount is what you pay to your doctor at the time of your appointment. This is the amount that helps off-set the cost of your treatment and makes it easier for the insurance company to cover the portion of your treatments they’re responsible for.

Most insurance companies require co-pays for standard check-ups and routine examinations.

If you undergo treatments that cost an additional amount, the billing department at your doctor’s office will help determine what you owe. They’ll reach out to your insurance provider to see how much of your treatment they’ll cover and then send you a bill for the remaining amount.

What Happens If You Don’t Meet Your Deductible

With other types of insurance, you’re required to pay your deductible if you want to file a claim. If you don’t make that payment in full, you won’t be able to file the claim successfully.

Health insurance is different.

You’re not required to pay the full amount of your deductible to use your health insurance throughout the year. Your insurance provider will still help you avoid having to pay the full price for the medical treatments that you receive.

It just means they’ll cover less of the cost than they would if you meet your full deductible amount.

Once you pay the deductible, your insurance company will cover a higher percentage of your medical treatments’ costs. Some plans even cover the full cost of the treatment for the remainder of the calendar year.

At the end of the year, the deductible resets. You’ll have to pay that amount out-of-pocket again before the insurance company will pay the bulk of your treatment costs.

How Providers Set Health Insurance Deductibles

Ultimately, the higher your deductible is, the lower your monthly premium payments will be. This will make it easier for you to pay for insurance throughout the year.

Insurance companies base the cost of their deductibles on the amount you pay each month. If you enroll in a plan with higher monthly premium payments, they’ll reduce the amount of your deductible. If you enroll in a plan with low premiums, they’ll make up the difference with a higher deductible.

Think about how often you tend to use your health insurance. If you have underlying health conditions or go to the doctor often, paying a higher premium for a lower deductible amount is in your best interest. However, if you don’t go to the doctor often, you’ll end up saving money with a lower premium amount.

Remember, you have to get medical treatment to start paying down your deductible. If you don’t go to the doctor often, you won’t benefit from a low deductible.

There Can Be More Than One Deductible on Your Plan

Unfortunately, health insurance companies break coverage up into different categories. You can have one deductible for standard healthcare and another for prescription medications.

This is both legal and normal. Take your time and review the deductibles on your current insurance policy. The more deductibles you have on your plan, the more money you’ll spend out-of-pocket.

What You Need to Look for When Shopping for Coverage

You’ll want to compare different plans and coverage levels when shopping for health insurance. This is true whether you’re getting it through the marketplace or enrolling in Medicare. Take your time and review these plan options in detail.

Look at the monthly premium amounts you’ll pay for your insurance. Then, compare the deductible rates you’re responsible for.

The best plans will have affordable premium rates that fit your monthly budget as well as affordable deductibles. Keep in mind that those deductibles will likely be significantly higher than the ones you’d find with other types of insurance policies.

Demystifying the Health Insurance Deductible for Good

Now that you’ve figured out what’s a deductible and how it works for your insurance coverage, you’re ready to take advantage of your health insurance policy in earnest. Just make sure to review every bill you receive.

Keep track of the money you pay toward your deductible throughout the year. This way, you’ll be able to make sure your insurance provider fulfills their end of the bargain.

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