What Is a Deductible in Health Insurance?

Healthcare plans are often complicated to understand, especially if you are unsure of what your needs are. Following is some helpful information regarding deductibles and how health insurance policies work.

What Is a Deductible in Health Insurance?
Health insurance deductibles are the amount you pay out of pocket annually for healthcare services before your insurance plan covers the additional cost. Once you max out your deductible, you pay a copayment for services covered by your policy while your insurance company covers the rest.

What Happens Once You Meet Your Deductible?
After meeting your deductible, you will only pay a copay or coinsurance for the rest of the services your plan covers. A coinsurance will pay a large portion of your care costs while you are responsible for paying the rest. Your health insurance deductible resets annually. Therefore, keeping an eye on the remaining amount as you move towards the end of each year is a good idea. If you are close to meeting your deductible, you may consider scheduling additional procedures before the year ends to lower potential out-of-pocket costs the following year.

How Health Insurance Deductibles Differ From Other Insurance Deductibles?
Most people are familiar with auto and homeowner insurance, which only pays for services once you have paid your deductible. However, many healthcare plans cover some costs, like those associated with annual physicals and preventative screenings, before meeting your deductible.

How Deductibles Impact Your Healthcare Costs?
Health plans that feature lower deductibles often have higher monthly payments. If you prefer to pay higher monthly premiums for lower out-of-pocket expenses in case of high-cost medical care, you may want to opt for a healthcare plan with a lower deductible. This type of plan is most suitable for those who have chronic medical conditions or play high-risk sports.

On the other hand, if you would rather have a higher one-time expense in case, you require high-cost medical care instead of smaller monthly payments, then high-deductible health plans may be preferable. This type of plan is best if you are younger, generally healthy or have a health savings account.

Types of Deductibles

Depending on the plan chosen and the number of people on that plan, there are several different types of deductibles.

• Individual deductible – These deductibles apply to individual health insurance plans. This is the amount you must pay out-of-pocket before your health insurance begins to cover the cost.

• Family deductible – With family deductibles, the amount applies to the medical expenses of the entire family covered. The insurance company’s coverage kicks in after the family reaches that specified amount.

• High deductible health plan – These plans usually have higher deductibles but feature lower monthly premiums and offer more cost-sharing responsibilities to the individual insured. These plans are usually best for those who are young, healthy or have additional health savings accounts.

• Low deductible health plan – Low deductible plans cost less upfront but have higher monthly premiums. With these plans, you’ll pay less out-of-pocket before your insurance covers your expenses.

Choosing the right type of health insurance plan depends on your health and personal finances. Before selecting a plan, you should consider your ability to pay monthly premiums, your health history and your risk of future injury or hospitalization. If you are unsure which health insurance plan meets your needs, speak with one of our insurance advisors today. We at K&B Financial are committed to help you make an informed decision and choose the best plan for your health insurance needs.