A Brief Guide Through Health Insurance Deductible

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Health Insurance Deductible

A Brief Guide Through Health Insurance Deductible

Health insurance has become an integral part of our lives. A huge part of every health insurance plan is annual deductible. It is essential to understand the out-of-pocket medical costs, which include health insurance deductible.

What is a health insurance deductible?

A deductible is a fixed amount you have to pay out of your pocket within a given period (usually Jan-Dec of a calendar year) before the insurance companies start to pay for your care.

A deductible amount varies from insurance companies, plans they offered, employer vs. individual plans and the coverage included in the plans. There are a few plans (not many though) that do not have any deductible.

You know when you HR hands you that big book of insurance plans, you ought to review the information and understand what is the total amount you will pay OUT OF YOUR POCKET, before insurance pays ANYTHING for your care.

What the heck does this all mean?

We are with you! The entire thing is a big, convoluted, complex maze. Let’s try to break it down:

  1. Monthly premiums
    • This is a premium, you pay, to your health insurance company, every month. Simply put; it is a membership fee.
    • For employer offered plans, this amount is taken out of your paycheck and then indirectly paid by the employer directly to the insurance companies. Most employer pays a portion of this monthly premiums. For example, if your monthly premium is $500, some employers will pay 70% of this $500 and others will pay $250-$350 towards this premium. So, when you think about dropping your employer, “because they are too cheap to change the office chairs”, think twice. You will be paying the whole monthly premium.
    • Individual plans tend to have a much higher premium and much smaller coverage when compared with employer funded plans. However, there are many government supported plans that offer a decent coverage for a small monthly premium
  2. Deductible
    • As mentioned above, This is an amount you much pay out of our pocket before insurance companies would pay anything to your doctors. The annual deductible amount care range from $250 – $6000 a year and in some cases as high as $12,000/year.
    • Remember, you don’t pay the deductible until you seek care. It is like car insurance deductible. You don’t pay the deductible unless you get into an accident or a tree falls on your windshield  or a TikToker tries to jump over your car using the skateboard and scratches the heck out of your car!
    • You don’t pay the deductible to your insurance, you pay it your doctor. When you receive a bill from your doctor’s office and it says “your responsibility” that is most likely your deductible.
    • TIP: We are not suggesting to have a an insurance plan or not, neither are we suggesting which plan to get. However, if you are someone who rarely goes to a doctor’s and generally healthy, you can avoid paying the high price of care through your deductible and ask for a cash price for your physical exam or general lab check-up. Health Beyond insurance has partnered with a lot of doctors and other health care providers to offer you an upfront cost of care.
  3. 80/20 or 60/40
    • You thought you were solid after you have paid your monthly premium and matched your deductible? Sorry, but you are not! There is one more thing called coverage %.
    • See, you will continue to pay your monthly premium as long as you want to keep the health insurance, but the annual deductible will go away (only for that 12 month period) after you have met the contracted amount. However, every time you go to a doctor, insurance will pay a % of the cost and then you will pay the rest. In most cases, after deductible, it is 80% of insurance and 20% of the patient. You will probably pay this amount after you have received the care. Again, you will pay this to your doctor, not to insurance companies.

A few things to keep in mind:

  • Co-payments, coinsurance, and other cost-sharing amounts do not count towards the deductible amount. In general, we do not owe co-payments or coinsurance before meeting the deductible amount. Until we have reached the deductible, we have to pay the cost of covered expenses out of our pocket.
  • The Affordable Care Act (ACA) has made it mandatory for all Marketplace plans to cover the entire cost of certain preventive benefits before meeting the deductible amount. It includes various services like vaccinations, wellness checkups, and a few preventive screenings. With some plans, even if we have not met the annual deductible amount yet, the aforesaid benefits are covered without cost-sharing.
  • Family plans are more likely to have two deductible amounts. One is the individual deductible applicable to each member, and the other is the family deductible, which applies to the whole family.

High or low deductible?

Some (very few) insurance plans have no deductible and are referred to as zero-deductible plans. If you are up for frequent doctor visits or need to take multiple medications, a zero-deductible plan might suit you best. These plans are likely to come with higher premiums. However, on the other hand, if you are on the healthier side and do not opt for frequent medical services, it might be a bit difficult to reach the annual deductible amount every year. In such a case, plans with lower premiums might be best for you.

How to choose health insurance deductible?

It is needless to say that the health situation varies from one person to another. Your needs rely on your health needs, budget and other factors. While you consider the options in hand, take your time, compare various plans and their costs, and choose the one that suits you best.

Stay Healthy,

Health Beyond Insurance

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