One of the most important parts of any health insurance will be the deductible amount. That’s right, you can’t get too far into shopping for health insurance without giving a deductible some thought. Let’s take a look at the differences between low and high deductibles and how important they are to protect your pocketbook while not skimping on your protection. Basically, let’s answer the question “what is a good deductible for health insurance?”
What is a Health Insurance Deductible?
When you buy health insurance, you typically pay a monthly premium, which is the amount of money you pay each month to be enrolled in the plan. On top of that, you may need to pay a deductible when you get medical care. The deductible is the amount of money that you will have to pay out-of-pocket for health care services before your health insurance will begin to pay for them. For example, if your plan has a $3,000 deductible, then you would have to pay for any covered expenses up to $3,000 each year before your insurance benefits kicked in.
Health insurance deductibles vary from plan to plan. Some plans have high deductibles, while others have low deductibles. A high deductible means that you have to pay a lot of money out-of-pocket before your insurance will start paying for services. A low deductible means that you don’t have to spend much money upfront before getting reimbursed by your health plan.
Deductible amounts can range from $500 to even several thousand dollars for an individual’s policy or family’s policy. That is why it is important to know what type of health insurance plan you are buying because it could mean paying more out of pocket than expected when seeing doctors or getting treatments or surgeries.
How Health Insurance Deductibles Work
Health insurance deductibles are one of the most misunderstood aspects of health insurance. A deductible is an amount you pay out-of-pocket before your plan starts paying for covered services.
Deductibles are an important part of any health plan because it gives you some control over your costs and encourages you to be careful about how much care you receive.
Health insurance deductibles work in conjunction with copays and coinsurance to control costs for insurers who want to make sure they don’t pay out more than they receive in premiums from policyholders over time. They also help protect policyholders from paying out-of-pocket costs that might be too high if they got sick or injured after signing up for a plan.
Some plans offer limited coverage during the deductible period, such as preventive care and prescription drugs. But most plans cover nothing until you meet your deductible.
Is it Better to Have a Low or High Deductible Health Insurance?
The size of your deductible is one of the main factors that determine how much you will pay out of pocket for health care services each year. So, if you are trying to decide which health insurance plan to choose, one of the things to consider is whether or not it has a high or low deductible.
High Deductible Plans
A high deductible plan typically has a higher monthly premium than a low deductible plan but requires less out-of-pocket spending on medical costs. These plans are most commonly used by people who have experience paying their own medical expenses and can afford some cost-sharing with their health insurance plan.
Low Deductible Plans
Low deductibles are often paired with lower premiums because they require more out-of-pocket costs from members. These plans are most commonly used by people who don’t want to pay for any medical costs and want their insurance company to cover all expenses.
If you are worried about paying for medical bills, then a low-deductible health plan is probably better suited for your needs than one with a high deductible. But if you don’t think you will need much care during the year and would rather save money by paying less upfront, then a high deductible plan might be the right choice for you.
Who Benefits From High Deductible Health Insurance?
High deductible health plans are best suited for people who have high out-of-pocket costs due to chronic conditions such as diabetes or cancer. A high deductible health plan allow individuals with these conditions to apply for a health savings account (HSAs) or flexible spending accounts (FSAs).
These accounts allow consumers with high deductibles to set aside money in advance so they can use it towards their medical expenses throughout the year without having to pay taxes on it until they take it out of their account at the end of the year.
Who Benefits From Low Deductible Health Insurance?
Low deductible health insurance plans are designed for people who want to protect themselves against catastrophic illnesses or accidents. If you are healthy and rarely visit the doctor, a low deductible health plan might be right for you.
If you have a chronic illness or expensive medical needs, it may not be worthwhile to buy a low-deductible plan because of the high premiums. If you know you will use your health insurance frequently, it might make more sense to go with a higher deductible plan that has lower premiums and covers more expenses for each claim.
Different Kinds of Health Insurance Deductibles
When looking for health insurance, you will need to find the right deductible for you. There are many different types of deductibles, and each one might be best for different people.
Here are two of the most common types of deductibles:
Individual Deductible
This applies to each person covered under the plan. If you need surgery to remove your appendix, for example, and your plan has an individual $1,000 deductible, then you would pay the first $1,000 out-of-pocket before reimbursements from the policy start kicking in. The rest of your bills would be covered by the plan sponsor (your employer or union), who pays claims on behalf of its employees.
Family Deductible
This applies to everyone in a family who is covered under an employer-sponsored health insurance plan. So, if you have four members in your family and they are all covered by one policy through work, then there is only one family deductible—not four individual ones.
Health insurance deductibles can be confusing to understand. But it is important to know what you are getting into before you sign up for a plan.
How Do You Reach an Out-of-Pocket Maximum?
The out-of-pocket maximum is the most you will ever pay for covered medical expenses in a given year. Once you reach that amount, your insurance company will pay for all health care costs for the rest of the year.
If your plan has an annual out-of-pocket maximum of $4,000 and you pay $2,500 in deductibles and copays in a given year, then your insurance company will pay for everything else after that.
When Can Your Deductible Be Waived?
There are times when your health insurance company may waive your deductible. For example, if you are pregnant or have a newborn child, some plans will waive your deductible for those first few months after birth.
You may also be able to avoid paying a deductible if you have an accident or other emergency that requires immediate treatment in a hospital or urgent care facility. In these situations, your insurance company should cover all or most of the cost upfront.
Can I Lower My Health Insurance Costs?
Health insurance deductibles are one of the biggest expenses you will pay when you get sick. But there is more than one way to shop for them. And some strategies can save you money in the long run.
There are two different types of deductibles: out-of-pocket maximums and annual out-of-pocket limits. The first is the total amount you have to spend during a year before your health plan starts paying 100% of your covered costs. The second is the total amount you have to spend on medical care throughout the year, no matter how many times you visit doctors or how many prescriptions you fill.
Both of these deductibles can be lowered by raising your monthly premiums—meaning they are not guaranteed prices but rather optional extras that may be worth it if you can afford them. It is also possible to lower them by choosing a plan with lower premiums and higher co-insurance percentages so that you pay more out-of-pocket when it comes time to fill prescriptions or visit doctors’ offices.
The Bottom Line
When you are comparing health insurance plans, it is important to understand your deductible. While it is tempting to choose a plan with the lowest possible deductible, keep in mind that lower deductibles can mean higher premiums. So how do you know what kind of deductible is right for you?
Well, that depends on a few things. For starters, how much can you afford to pay per month? If you are struggling to make ends meet at the end of every month and would rather not have to worry about meeting your health insurance deductible each year (or month), then a high-deductible plan might be right for you. But if there is any chance that an unexpected medical bill could put a serious strain on your bank account, then it is probably smarter to choose a low-deductible plan with lower premiums and higher out-of-pocket costs.
If you are looking for more helpful articles, access the FREE web class and/or check out the courses offered.
0 comments