Every year, your employer sends you piles of information so you can decide which health plan to choose. It seems like the rates for those options go up every year while the coverage only gets worse!
You’re not imagining things because health insurance costs are like a runaway train lately. A 2019 survey found that the average health insurance deductible doubled to $1,655 since 2009!
How do you decide which plan is best for you when you don’t know what all the terms mean?
We’re here to help you understand questions like “what is a health insurance deductible?” and “which plan do I choose?”. Keep reading to learn all about health insurance deductibles before your next open enrollment.
What Is a Health Insurance Deductible?
The first thing you should know is what a health insurance deductible is and how they work. In short, the deductible is the amount you and your family need to pay before the insurance plan kicks in to cover any remaining costs.
For example, let’s say you broke a leg and the hospital bill total came to $3000. If your deductible is $1000 and they cover 50% of the rest, then you would cover the first $1000 of the bill and 50% of the rest of the bill. Meaning your responsibility would come to $2000 while your insurer would pay $1000.
Look for the deductible amount when comparing health plans during your annual open enrollment period. The deductible is one of the first numbers you should look at when comparing your options.
Your monthly premium isn’t included in this deductible amount and most insurance companies still cover basic preventative care (like your annual check-up) before you meet your deductible.
Also, keep in mind that many health insurance plans have both a single person deductible amount as well as a family deductible. If you reach your deductible and your spouse gets sick, they may also have a deductible to pay before the insurance kicks in. But, if you met your family deductible by yourself, then the insurance would kick in right away for your family members.
Types of Deductibles
So, to delve a little deeper into health insurance deductibles, there are a few different types of deductibles your plan might have. These are some of the most common kinds of deductibles top insurance companies use.
When every dollar you spend on medical needs counts towards your deductible, that’s called a comprehensive deductible. That means your first visit or two come out of your pocket. Once you’ve met your deductible, the insurance company will help cover part of the bills for the rest of the year.
Other companies will offer free preventative services and those bills won’t count towards your annual deductible. These kinds of deductibles are non-comprehensive.
Sometimes, the insurance company has a list of preferred doctors that they prefer you visit. When you use their approved doctors, the insurance company picks up more of the bill and offers a lower deductible. the “in-network deductible” refers to the deductible you’ll pay when you see an in-network healthcare provider.
Out of Network Deductibles
If you choose to see a doctor that isn’t in your insurance company’s approved network, you might see a higher deductible and total cost. Pay attention to the out of network deductible if you think your preferred doctor is not in-network.
Prescription Medication Deductibles
The last kind of deductible we’ll discuss is the prescription medication deductible. Some insurance companies charge you a separate deductible for your medications before they start to pitch in.
A Quick Tip: A great way to help cover your medications if you’re in your golden years is to sign up for a Medicare part D plan. Most states, like Texas, have plenty of good choices for Medicare part D plans if you’re struggling to afford your medications.
High Deductible vs Low Deductible Plans
So, now we’ve come to the ultimate question. Should you choose the higher deductible plan or the lower deductible one?
Everyone’s situation is as unique as their fingerprint, so please consider the health needs of you and your family. Here’s a couple of things to keep in mind though.
Higher deductible plans often have lower premiums deducted from your paycheck. If you and your family don’t go to the hospital often, a higher deductible could save you money because you don’t need as much medical attention. But, if anyone gets injured or an unexpected illness, you could end up eyeballs deep in medical debt.
But, lower deductible plans don’t come cheap! You could pay twice the premium out of each check for a low deductible plan than you would for a higher deductible plan. For those who take several kinds of medications and see several doctors, you might want a lower deductible because you’ll pay much more in the long run if you don’t.
Make Your Health Insurance Work for You!
We all know how complicated the American health insurance market is. Sometimes you feel like you should take a class on health insurance before deciding which option to buy!
Now that you know more about it, you’ll be able to help a friend or family member who asks “what is a health insurance deductible?”. The more regular people know about their insurance, the better prepared they’ll be to make that decision when the time comes.
We hope you enjoyed reading this article and that you learned a few things about health insurance deductibles. If you’re looking for more informative and entertaining, check out the rest of our blog today!