About Health Insurance Deductibles
If you live in the United States of America, it means that at some point or another in your life you heard of or had to deal with the issue of health insurance. But despite this massive exposure of the topic to the wide public, a lot of people have found themselves having troubles understanding how health insurance works at least once in their lives.
One of the things that are particularly confusing and hard to understand is the issue of deductibles. But a study from 2016 has shown that understanding this term, alongside others like out-of-pocket maximum, copayment or copay and coinsurance, has proven to be vital for a basic understanding of the American healthcare system.
In this article, we are going to take a deeper look and try to analyze how health insurance deductible work.
What Does “Deductible” Mean?
A deductible refers to the amount of money you have to pay every year for medical care before your health insurance company and plan start to pay. This practice is known as cost-sharing between an individual and a health insurance company. So far so easy, right? Let’s put it in practice then.
Show Me the Numbers
Let’s say that your deductible is $2,000. You are responsible to pay 100 percent of all eligible medical care expenses until you meet the amount of $2,000. For example, if one medical visit will cost you $200, you will have to pay for that and so on and so forth until you reach the limit. After that limit is reached, you will share the costs with your health insurance company through coinsurance.
Some major health care insurance companies will cover for certain preventive services even though you have not yet reached the limit of your deductible. These are the ACA- like plans. The ACA plans go even further by paying for the full price of these preventives.
Not Everything You Pay Goes Towards a Deductible
There are some medical costs you will have to pay for and will not count towards your deductible. These include:
- services that might have been recommended to you by a doctor, but which are not mentioned in your initial plan
- services that have been offered to you by a provider who was not a part of the ones working with your health insurance company
- premiums, which are considered a sign of luxury and not of necessity
How Much You Should Pay for a Deductible
The principle is quite simple, the lower the deductible, the higher the monthly payment for your health insurance’s premium and vice versa. And while a higher deductible and a lower monthly payment might seem attractive for a lot of people, you should be very considerate when making this decision.
You don’t want to find yourself at the end of the year paying more out-of-pocket money than it would have been necessary. Taking your medical history background and that of your family into consideration, you should settle for a balance between the two.
All in all, if the right amount is still a hard decision to make, at least now you know how health insurance deductible works.