What Is a Health Insurance Deductible?

Everyone needs health insurance, now more than ever. With the COVID-19 pandemic in its second year, there has never been a better reminder that taking care of your health is key to remaining well and safe. The right health insurance can help make certain you receive both routine and critical medical care affordably at the time you need it. 

Though health insurance substantially reduces your out-of-pocket burden for medical expenses, it does not eliminate that burden. Most care requires some degree of cost-sharing, meaning you must cover a portion of the expenses yourself. One of these personal costs may be your deductible. A deductible is a specific cost burden that will accompany certain medical procedures or services. Here’s how it works. 

How Do Deductibles Work? 
A deductible is a fixed, yearly amount that you must pay for medical expenses before your health insurance will cover the remaining costs of care. Deductibles are designed to lessen the cost burden posed to medical insurers. By sharing some costs, insurers can continue to offer affordable premiums and more expansive coverage to all of their policyholders. 

For example, suppose that your health insurance plan has a $2,000 annual deductible. This means that you will have to pay up to $2,000 out of pocket in a single year before your insurance plan will cover certain costs of care. After you have paid off the deductible, then your plan will cover additional eligible expenses. In this example, if you received a $5,000 surgery bill, you’d pay $2,000 and your insurance would cover the rest. Once your plan renews, the deductible obligation starts over. 

When Do I Have to Pay It? 
Health insurance deductibles do not necessarily apply to every medical expense you might face. Some plans require you to pay 100% of the costs of care until you have met your deductible while others exempt certain care from the deductible obligation. 

Most plans exempt regular checkups, medically necessary services and preventative care from deductible rules. You may only have to pay the necessary copayment or coinsurance regardless of whether you still owe money on your deductible for a checkup, lab work, vaccination or other routine care. This enables you to still receive the care that is most necessary for you to stay well, without facing an undue cost burden. 

Your deductible will still often apply to certain care costs, such as inpatient care expenses, certain imaging services or other care that your insurer might not deem medically necessary. You can examine precisely how your plan outlines your own deductible obligations by reviewing your explanation of benefits document. This will outline exactly how and when the deductible will apply. 

For further information on your health insurance deductible, contact our agency today!