Of all of the ways that you need to keep track of your finances, managing healthcare costs is especially important. Your budget has to include health insurance premium payments, and you’ll also need to factor in other costs of health care besides just premiums. When you’re trying to get a sense of what your medical expenses will be like with the plan that you currently have or you’re making a decision about which plan to get, you have to pay close attention to your deductible. Here are some key things that you should understand about a health insurance plan’s deductible and how it can affect your direct expenses.
What Is a Deductible in an Insurance Policy?
Typically, most types of health insurance plans have a deductible. Your plan’s deductible is the amount you pay for covered medical expenses before your health insurance will start paying for them. You need to reach the full amount of a deductible in order for a carrier to begin processing and paying claims. However, many marketplace health plans pay for some preventive care services without requiring you to reach your deductible first.
Some plans have separate deductibles for prescription drug benefits. With this type of plan, paying for prescription drugs will not go towards the principal deductible.
After you have met your annual deductible, you may still have to pay some costs for medical services. You’ll pay copayments for appointments such as visits to a physician or sessions with a physical therapist. You may also have coinsurance, which is a percentage of the total cost of services. You will continue paying for these charges until you have reached a policy’s out of pocket limit. This amount is usually higher than a deductible, but they could be equal to one another.
What Does a Deductible Include?
General expenses that providers charge you for medical care will count as part of your deductible. Examples of covered expenses include lab fees, diagnostic imaging, or procedures.
Copayments may not be part of your deductible, and it depends on the terms of your individual plan. An insurance plan’s Explanation of Benefits will detail which costs apply towards the balance of a deductible.
What Is the Relationship Between Your Deductible and Your Premium?
The premiums that you pay for coverage every month do not count towards your deductible. A health insurance plan’s monthly premium and deductible are both the sole financial responsibility of the insured and not the insurance provider.
A plan with a low deductible is usually going to have more expensive premiums than a plan with a high deductible. Choosing a plan with a high deductible can save money because it spares you from having to pay a higher premium every month. Nevertheless, it may not be a good option if you anticipate that you’ll need to be using your plan’s benefits frequently. When you get a lot of medical care, your total out of pocket costs could wind up being higher than they would be if you had a lower deductible.
How Long Does It Take to Reach Your Deductible?
The amount of time that it takes to satisfy a deductible can depend on a couple of different factors. First, the amount of your deductible is likely to determine how quickly you will pay that sum. The lower your deductible is, the sooner you will reach it when you are getting medical care. Secondly, the frequency with which you get medical care could affect the timeline for hitting a plan’s deductible. If you don’t use your health insurance because you don’t need a lot of care, you may not reach your deductible over the term of a policy.
The type of services that you need will bear on how fast you meet your deductible and your plan benefits begin to kick in. Routine services that are not that expensive probably won’t amount to a considerable part of your deductible. In contrast, intensive treatment from a specialist could quickly satisfy a plan’s deductible.
When you aren’t getting frequent or intensive services, not reaching a deductible isn’t really cause for concern. However, a large unmet deductible could be a serious problem if you suddenly need costly services for emergency care. In that scenario, you may have to pay the full amount of your deductible all at once before your plan will start paying for treatment.
