How Do Health Insurance Deductibles Work?

Today we’ll talk a bit about what a deductible is. I often get asked this question during appointments with clients. A deductible is essentially the amount you pay out of pocket before your health insurance begins covering a portion of your medical bills. The deductible usually only applies to major services (not office visits, etc.).

For example, if you have a $3,000 deductible, you must pay $3,000 in covered medical expenses before your plan starts paying its share.

Now, the one wrinkle in this is that before you meet your deductible, you’ll receive something called an in-network discount (as long as you're getting care in network). This in-network discount can range from 30% to 70% off the list price of a service or procedure. Whatever your cost share is after the in-network discount goes toward your deductible.

After you meet your deductible, you'll usually pay coinsurance—a percentage of the cost—for services until you reach your out-of-pocket maximum. This coinsurance is often a 70/30 or 80/20 split (with the insurer covering the 70% or 80% in these examples).

Deductibles can vary quite a bit between plan options, and high-deductible health plans (HDHPs) often come with lower monthly premiums. This can make them a good choice for healthy individuals who rarely visit the doctor. And if you already have an HSA with funds in it, they make even more sense.

Understanding your plan’s deductible will help you plan and budget better for your healthcare costs.

For no-cost guidance in picking out the best health plan for you, reach out to me at 615-579-7592 or joel@wellnessinsurance.info. I'd be happy to help!