A major part of a health insurance plan is the deductible. However, do you really know what that means?
In health insurance, a deductible is the amount that you must pay each year for medical services before the insurance company begins to pay for covered medical expenses.
For example, if your health insurance plan has a $2,000 deductible and you get a medical bill for $7,000, you are responsible for paying $2,000 and your insurance company is responsible for the remaining $5,000.
They can range from a few hundred to thousands of dollars, depending on the policy. Some plans (typically HMOs) don’t have a deductible at all.
The following are examples of some medical services that would usually go toward your deductible:
- Expenses related to hospitalization, surgery and procedures.
- Lab tests, MRIs, CAT scans, surgical costs, anesthesia, physical therapy, medical devices.
- Charges for mental health, chiropractic care and other services.
Which is better, a higher or a lower deductible?
To get a lower monthly premium, some people look for plans with a higher deductible. This work best if you have very few medical expenses.
For active families, a lower deductible plan might be a good choice. If the kids are in sports—or someone has a chronic health problem, with lots of medical and emergency visits—it may be worth paying a higher premium to get a lower deductible plan.
When choosing a health insurance plan, you should consider other factors, not only your deductible, like coinsurance, out of pocket maximums and copays. We’ll cover each one of those topics in future posts.
If you need help understanding your health plan or in choosing a new health plan for you, for family or your business, please contact us! We’ll be happy to help you.