What Is A Deductible? A health insurance deductible is the amount you pay out of pocket for services covered under your plan before your plan begins to pay. The amount you pay for a deductible is determined by the type of health plan you have and your benefits.
As a general rule, the higher your premium, the lower your deductible is likely to be. Similarly, a higher deductible can result in a lower monthly premium. Your monthly premium is the fee you pay to your health insurance company as like a membership price to be part of the plan you choose.
How Deductibles Work?
When you buy health insurance, you pay a monthly premium for your coverage. Health plans usually include a deductible that you must pay before your insurance plan will start to cover your eligible expenses.
If your plan has a deductible of $5,000, you will have to pay all of your medical expenses until you have reached that $5,000. At that point, your insurance will start paying their portion as stated in your benefits for the services you use.
If you have individual coverage, you may pay one deductible for eligible healthcare expenses and another toward prescription drugs.
If you have family coverage, you may pay individual deductibles for each person but you also might have a family deductible that would cover everyone.
Some insurance plans will pay for certain covered services, such as preventive care, without requiring you to meet your deductible first.
Insurance companies charge deductibles as a cost-saving measure. The logic is that anyone who has to pay out of pocket will think twice before using an ER or medical services if they don’t need them.
Co-payments & Coinsurance
It’s important to understand what the deductible does and doesn’t cover. “Any approved medical charges that you pay out of pocket will usually go towards your plan’s deductible for the year. Co-payments are typically considered exceptions to this rule. Your co-pay is a set dollar amount that you pay for doctor visits, drugs, or visits to an urgent care facility. These amounts may not count toward your deductible for the year.
Example: A co-payment is the $20, $30 or whatever other amount you have to pay at your doctors for the visit.
Don’t confuse co-payments with coinsurance. Coinsurance is usually a percentage of the bill which you have to cover. Coinsurance usually start once your plan starts paying for services after you have reached your deductible.
Example: Let’s say your plan pays 80% of all approved bills, that means your Coinsurance is 20%.