A health insurance deductible is the amount, which the insured has to pay before their health insurance carrier starts paying a certain amount of their medical treatment cost. The deductible amount depends on the type of health insurance which one has and the benefits that are covered
. Deductibles are a type of cost-sharing in which the insurance carriers splits the cost of healthcare with the insured. The deductible amount is reset every year and the insured every year has to pay the deductible amount before their insurance carrier covers their medical expenses. Depending upon the type of plan some healthcare expenses like an annual check-up or doctor’s visit might not be subject to the deductible. For an individual, the deductible might be anywhere from $500 to $1500 and for a family, the deductible may be anywhere from $1000 to $3000. Health plans that have lower premiums have higher deductible and plans with higher premiums have lower deductibles. Individuals while purchasing a health insurance plan are required to choose a deductible amount for their plan.
How Does a Health Insurance Deductible Work?
How a health insurance deductible works can be best understood with the help of an example. If an individual has a health insurance plan with a $1,000 deductible and if that individual require medical treatment either due to accident or illness, then the individual will first need to pay $1,000 of their medical costs from their pocket and then only his health insurance plan will come into effect and will cover the remaining amount. However, even after paying the deductible amount, an individual might still have to pay a copay or coinsurance depending upon the type of their plan.
Choosing the Right Deductible Amount
Individuals choose the best health insurance coverage depending upon their health and budget. While buying a health insurance plan, individuals are allowed to choose their deductible amount. It is a common practice among people shopping for health insurance that they compare health plans based simply on terms of insurance premiums. However, the fact is that there are several other expenses like the plan’s deductible and the copay and coinsurance costs that contribute to the overall cost of the health plan. Therefore, while choosing a health insurance plan it is vital to keep all these aspects in mind. Individuals who will frequently utilize their health insurance plan due to some complex health issues should never go for a health plan with the lowest monthly premium because such plans will not be cheapest in the long run because of a high deductible.
Different Types of Health Insurance Deductibles
Every health insurance plan is different and comes with different levels of coverage. Hence, even health insurance deductibles are not the same for all the coverage. Some of the coverage and healthcare expenses may have either lower deductibles or no deductible, as it depends upon the plan which one has chosen and the type of deductible offered by the plan. In the U.S. health insurance market there are following types of different health insurance deductibles:
Comprehensive Deductible: It is a type of deductible that is applicable across all the coverage and it adds up until insured have met their deductibles. It is only after meeting the comprehensive deductible by the insured that their plan’s coinsurance will come into effect.
Non-comprehensive Deductible: The non-comprehensive deductible is a type of deductible that applies only to specific coverage or medical expenses of a health insurance plan. Some of the health insurance policies provide some coverage in which the insured does not have to pay any deductible. However, individuals must find out whether the coverage without a deductible is beneficial or not.
Embedded Deductible – If an individual is on a family health plan having embedded deductible, then the health plan comprises of two components like an individual deductible and a family deductible. This allows each member of the family an opportunity to get his/her medical bills covered before meeting their entire deductible amount. The deductible of the individual is embedded in the deductible of the family.
Non-embedded Deductible – In a Non-embedded or aggregate deductible, an individual deductible is not embedded in the family deductible. In this type of deductible, the entire deductible amount first has to be met either by one family member or by a combination of family members and then only the insurance carrier will pay for the family’s medical bills.
In-network and Out-of-network Deductibles: The deductible amount is different for the healthcare services insured receive either from the in-network provider or from the out-of-network providers. Out-of-network deductibles are higher compared to in-network deductibles, as out-of-network healthcare services are expensive to receive.
Prescription drug deductible: Some of the healthcare plans even come with a separate deductible to cover prescription drugs. The insured first have to meet this deductible before availing prescription drug benefits from their insurance carrier.