Health insurance isn’t an exciting topic. With its reference to sickness and injury, and above all, the cost of buying one for you and your family, people would much rather avoid talking about it altogether. On top of that, the terminology associated with the industry can sometimes be confusing, and the rules can be just as tricky.
But like any situation in real life, you can’t run away from your problems. And with health insurance, you really need to have this department sorted out sooner than later. Delaying the acquisition of medical, dental, vision, etc. insurance can become a costly affair in the case that you are presented with a medical emergency.
This blog aims at clearing up any confusion you may have related to deductibles.
So let’s start from the beginning.
With the countless types of insurance companies, plans, and benefits, it’s hard to know where to start. But keep in mind that you will be required to pay an annual amount. Depending upon the plan you choose, there is a limit to how much you will have to pay. There are a few basic terms that you will need to understand first.
What is a deductible?
It is the amount of money you have to pay for medical services before your insurance company pays for anything. However, certain preventive services can be covered even before the complete deductible has been paid. For example, if you select an insurance plan that has a deductible of $500, you will have to pay the entire amount before your health insurance picks up the bill for medical services.
So if you go to the doctor and end up with a bill for $800, you would pay $500 toward your deductible, and the insurance would cover the remaining $300 of the health care bill.
But if you have a family, you should expect both an individual deductible and a family plan deductible. Different plans have separate deductibles for each aspect of the insurance plan. So while your individual deductible is $500, your family’s could be $1500.
Note:
Some plans have separate deductibles for different services. For example, a health insurance plan may have a specific deductible for medical services and another one for prescription drugs. Make sure to ask your insurance provider about all the different deductibles. And remember to authorize any diagnostic services such as blood tests or X-rays with your insurance provider in advance. They may deny covering these charges, and you would have to pay out of pocket. Moreover, they may not even count towards your spending limits.
So what happens when you reach the deductible?
Once you reach the deductible of your health insurance, there are a few different scenarios that may apply.
- ‘No charge after deductible’
This means that after you pay the deductible, the insurance provider will pay for all your medical expenses for the remainder of the year.
- Copay
A copay is a fixed amount. You have to pay this amount of money for every health care service you use. Copay varies depending upon the type of service you choose. For example, your plan may charge a copay of $15 for visiting your primary care physician, the emergency room for $100, or purchasing prescription drugs- $15 for generic prescriptions, or $30 for name-brand drugs.
- Coinsurance
Coinsurance is calculated as a percentage of the total cost that both you and the insurance provider need to pay. It is often applied after the deductible has been reached.
The cost of medical bills is typically shared with the insurance company only after the deductible is paid. Depending upon which package you select, the medical expense will be split accordingly. For example, an 80/20 coinsurance means the insurance provider covers 80% while you pay 20%.
For example, if you have a $500 deductible and a coinsurance of 80/20. And you get a bill for $800, you have to pay $500, and then the remaining $300 will be split between you and the insurance provider. Your portion is $300 x .20 = $60. But once you already reach the deductible, the bill will be completely split 80/20.
If for some reason, you end up paying more than your deductible, the insurance company will refund the amount you overpaid.
How long do I keep paying?
You keep paying a portion of your medical bills until you reach your out-of-pocket maximum. Once you spend this amount, your insurance will then cover 100% of your benefits for the remainder of that year. But the medical costs that count towards your out-of-pocket maximum depends on the health insurance provider as well as the plan that you choose.
However, once the year is over, you will need to renew your plan. Just remember that the deductible will reset, and you will have to start making payments all over again.
Is it possible to be insured without a deductible?
Yes, there are health insurance plans with no deductibles, which are referred to as zero-deductible plans. HMOs typically don’t have deductibles. A zero-deductible plan is best for those who frequently visit doctors or take multiple medications. These plans usually have higher premiums, while high-deductible plans are often accompanied by lower premiums.
Final thoughts
Medical insurance is an added expense. But living without one can prove to be extremely expensive in case of an emergency. Even if you are healthy right now, it’s impossible to predict when something could suddenly go wrong. So there is no point in running away.
The best way to deal with medical insurance is to hope for the best but prepare for the worst. So something is better than nothing.
Select an insurance plan that suits your budget and meets your requirements. More importantly, you need to purchase health insurance from a company that offers flexible and secure plans for you and your family.
But don’t wait till the last moment to apply for health insurance. Get one today.
