How Deductibles Work in Health Insurance
One of the most difficult choices that an individual has to make is selecting the best health insurance plan. While many people get a standard plan offered through their job, many others must select their own from a variety of options. And there is no shortage of options. For different prices, each different plan offers a large variety of aspects. The choice is made most difficult because a person has to make a decision based upon their expectation of need. The plan that one who expects to use a great deal of healthcare will obviously differ greatly from one who does not expect to use very much at all. One of the factors that varies the most from plan to plan is the deductible. What is a deductible and how should it factor into health insurance decisions?
Everybody has seen a deductible. It is usually mentioned in the insurance plan. For example, for $100 a month, an individual can purchase a health insurance plan with a $10,000 deductible. For $500 per month, an individual can purchase a health insurance plan with a $500 deductible. But not everybody understands exactly what this means. Essentially, the deductible is the amount that the consumer is responsible for before the health insurance company will cover their costs. If a user has zero deductible (which would be a rare and expensive plan), then they would never have to pay healthcare costs out of pocket. Typically, the level of the deductible has an inverse relationship with the monthly cost of the plan. Low cost health insurance plans usually have a high deductible that will require the user to pay for most of their routine medical costs. Higher costs health insurance plans will have a lower deductible that will kick in if the user has any procedures outside of the occasional office visit.
To illustrate this, let us imagine a consumer who has purchased a plan for $250 per month that has a $1000 deductible and assume no other benefits. During the course of the year, this person goes to the doctor’s office five times with each visit costing $100. The consumer would be responsible for paying this entire $500 bill out of their own pocket in addition to the $3000 they will owe in health insurance for that year. Now, suddenly this individual breaks his or her arm and has to travel to the emergency room. The bill for this comes to $20,000. The consumer would still have to pay the $500 remaining on his or her $1000 deductible, but the health insurance company would cover the remaining $19,500.
With the escalating cost associated with healthcare and health insurance, choosing the right insurance plan has never been more difficult or more important. Understanding how the deductible works and then determining what level of deductible is right for you is a factor that can make the process slightly less difficult. Like many other factors of life, it is about balancing risk vs. benefit and hoping that you made the right decision after the fact.
Our friends:
NY Times – Admissions Section
AUA – on of the Top Caribbean Medical Schools
Processing your request, Please wait....
