Deductible Health Insurance: 7 Things to Know

What is a Deductible?

A deductible is a specific amount that an insured individual must pay out-of-pocket before their insurance coverage begins to pay for eligible medical expenses. Deductibles are a common feature of many health insurance plans and serve as a way for insurance companies to manage their financial risk.

Types of Deductibles

There are three main types of deductibles:

1. Annual deductible: This is the most common type of deductible. It applies to all covered services within a policy year, which typically runs from January 1 to December 31.
2. Per-person deductible: This type of deductible applies to each individual covered under the policy. For example, a family policy with a $2,000 per-person deductible means that each family member must pay $2,000 out-of-pocket before the insurance coverage begins.
3. Per-family deductible: This type of deductible applies to the entire family covered under the policy. For example, a family policy with a $4,000 per-family deductible means that the family must pay a total of $4,000 out-of-pocket before the insurance coverage begins.

Deductibles can vary widely in amount, ranging from a few hundred dollars to several thousand dollars. The higher the deductible, the lower the monthly premium. This is because the insurance company is taking on less financial risk when the insured individual must pay a larger portion of the medical expenses.

Pros and Cons of Deductibles

There are both advantages and disadvantages to having a deductible health insurance plan.

Advantages:

• Lower monthly premiums: Deductibles are a way for insurance companies to manage their financial risk. By requiring the insured individual to pay a larger portion of the medical expenses, the insurance company can offer lower monthly premiums.
• Increased financial responsibility: Deductibles can help individuals become more financially responsible for their healthcare. When individuals have to pay for a portion of their medical care out-of-pocket, they are more likely to make decisions about their healthcare that are cost-effective.

Disadvantages:

• Potential for high out-of-pocket costs: If an individual has a high deductible, they may be responsible for paying a significant amount of money out-of-pocket before their insurance coverage begins. This can be a financial strain for some individuals.
• Delayed access to care: If an individual has a high deductible, they may be more likely to delay getting necessary medical care because they cannot afford to pay for it out-of-pocket. This can lead to serious health consequences.

Choosing the Right Deductible

When choosing a health insurance plan, individuals should carefully consider which deductible is best for their needs. There are a number of factors that should be considered, such as:

• Income and financial resources: Individuals who have a higher income and can afford to pay more out-of-pocket may choose a higher deductible plan with a lower monthly premium.
• Health status: Individuals who are healthy and expect to have few medical expenses may choose a higher deductible plan with a lower monthly premium.
• Age: Younger individuals are generally healthier and can afford to pay more out-of-pocket, so they may choose a higher deductible plan with a lower monthly premium.
• Risk tolerance: Individuals who are comfortable with the idea of paying more out-of-pocket for medical expenses may choose a higher deductible plan with a lower monthly premium.

Tips for Managing Your Deductible

There are a few things that individuals can do to manage their deductible and make it more affordable.

• Contribute to a health savings account (HSA): HSAs are tax-advantaged accounts that individuals can use to pay for eligible medical expenses, including deductibles. HSAs can help individuals save money for medical expenses and reduce their out-of-pocket costs.
• Negotiate with your healthcare provider: Some healthcare providers are willing to negotiate the cost of services, especially if the patient is paying out-of-pocket. Individuals should always ask if there is a discount available for self-pay patients.
• Consider a payment plan: Many healthcare providers offer payment plans that allow individuals to spread out the cost of their medical expenses over time. This can make it easier to afford a high deductible.
• Shop around for the best price: When getting a medical procedure done, it is important to shop around for the best price. Individuals can compare prices from different providers to find the most affordable option.

Conclusion

Deductibles are a common feature of health insurance plans. By understanding the different types of deductibles and the factors to consider when choosing a deductible, individuals can make an informed decision about which plan is best for their needs. By following the tips above, individuals can manage their deductible and make it more affordable.