Learning how deductibles work for health insurance is important information to know when choosing a health insurance plan. However, it can get confusing. To help clear up the confusion associated with deductibles, here is the definition of what a deductible is:
A deductible is defined as the amount of financial responsibility you, the policy holder, need to pay out of pocket before the insurance company will help you pay any expenses.
Until you meet your health insurance deductible, your insurer will require you to pay for some, if not all, of your medical bill. Understanding how deductibles work for health insurance is vital information to know when preparing for an expensive medical procedure like surgery. Waiting to schedule a surgery, or other expensive procedure, for when you meet your deductible can save you thousands of dollars.
The importance of understanding how deductibles work for health insurance
Saving money is an incredibly important part of life. Never is that more important than when it comes to your healthcare. Before you choose a health insurance plan, understanding how deductibles work for health insurance is a great way to prepare for the inevitability of utilizing the protections of your health insurance policy.
What plan is the right fit for you?
There are four plans to choose from: Platinum, Gold, Silver, and Bronze. The deductibles for these plans can range from a high of $5,500 to there being no deductible at all. Below is a chart that visually breaks down the monthly premium vs deductible associated with each plan.
Platinum and Gold plans:
These plans usually have no deductibles associated with them. However, the monthly premiums tend to be much higher than a Silver or Bronze plan. Individuals and families chose these plans because they may need to use their plan more regularly. The monthly premiums are higher but there is never a concern of needing to meet a deductible before a procedure.
The “middle of the road” plans are the Silver plans and are the most popular. The deductibles for Silver plans can range from $1,250 to $2,000. These are the most popular plans because they have reasonable monthly premiums and deductibles.
Many individuals will chose a Bronze plan (high deductible health plan) in order to keep their monthly premiums low. However, the deductibles for these plans can be incredibly high. ($5,000-$5,500). These plans usually are not a good fit for those who need to use their policy more regularly. For example: a family with several children. A Bronze plan may be a good fit for an individual who is trying to meet the insurance minimum to avoid the Health Insurance Tax Penalty. Especially if they don’t need to see the doctor that often outside of annual check-ups.
How do you meet your annual health insurance deductible?
Let’s say you chose a Silver plan with a $2,000 annual health insurance deductible. As you pay for tests (lab work), x-rays, procedures, or visits to the ER, you are gradually increasing the amount of money that will be applied to your annual health insurance deductible. The important thing to note is that not all services are applied towards your health insurance deductible. For example: not all doctor visits are applied toward your annual health insurance deductible. Over the course of the calendar year, you gradually accrue money to meet your health insurance deductible. Once you meet your $2,000 health insurance deductible, your insurer will start to pay varying percentages. Of course, you will still have a copay of 25%-35% of total hospital bills, fortunately, it wont be for the entire bills balance.
What happens if you need to have a procedure, but you haven’t met all of your $2,000 health insurance deductible.
After doctor fees, facility fees, and anesthesia fees, some medical procedures can range between $20,000 – $60,000. If you haven’t meet your health insurance deductible, it can be easy to become concerned at the possibility of having to pay for that entire procedure out of pocket. Fortunate for you, any procedure counts towards your health insurance deductible.
How much do I have to pay for a procedure if I haven’t meet my health insurance deductible?
Believe it or not, this is very easy to explain. All the hospital will do is take the amount you have accrued towards your health insurance deductible and subtract it from your health insurance plan’s $2,000 deductible. Below are three examples of how that plays out.
Since you have accrued $0 towards your health insurance deductible, the first thing the hospital will do is subtract your $2,000 policy deductible and set it aside for you to pay in full.
Since you have accrued $1,000 towards you health insurance deductible, the hospital will subtract that $1,000 from your $2,000 health insurance deductible. The hospital will set aside the final $1,000 for you to pay in full.
Since you have accrued $1,800 towards you health insurance deductible, the hospital will subtract that $1,800 from your $2,000 health insurance deductible. The hospital will set aside the final $200 for you to pay in full.
Now that you have meet your annual health insurance deductible, you will need to understand your coinsurance (25% to 35% of hospital bill)
- You gradually accrue money towards you health insurance deductible through tests (lab work), X-rays, procedures, or visits to the ER.
- Most insurance policies will not cover most procedures until your health insurance deductible has been met.
- Once your health insurance deductible has been met, your insurance company will pay either 65%-75% of your total hospital bill
We hope this has helped you better understand how deductibles work for health insurance.