In health insurance, there are a lot of terms that you will come by. Then again, it is the same with every other insurance.
If you are new to health insurance, it’s important to understand these terms. This will make sure you understand the coverage and costs you’ll have under your policy.
One of the more common terms you’ll hear when it comes to health insurance is the deductible. But what does deductible mean in health insurance?
Below you’ll get a brief overview of this term and how deductibles work.
What Does Deductible Mean In Health Insurance?
A health insurance deductible is an out-of-pocket amount of money that you have to pay for your healthcare before your health insurance policy starts to pay for your medical expenses.
How Much Are Deductibles?
How much a deductible is will vary depending on your plan. However, the costs of health insurance deductibles often range from $500 to $1,500 for individual plans. On the other hand, if you have a health insurance family plan, your deductibles may range somewhere from $1,000 to $3,000. Or basically twice as much as you pay for in individual health insurance plans.
For family health insurance plans, there may also be an individual deductible for each family member. In a $2,000 deductible family health plan, each member might have a deductible of around $350.
But there is no need to worry though. Most health insurance deductibles, about 70 percent, only cost $3,000 or below.
How Do Deductibles Work?
Let’s say your health insurance plan has a $1,000 annual deductible that starts on Jan 1. On Jan 2, if you have a $2,000 medical operation, then you will have to pay for the first $1,000 of that out-of-pocket. That’s your deductible.
Then, after paying that $1,000, your health insurance plan will provide coverage for the remaining $1,000.
However, for the rest of the year, you will not owe any more for your deductible. Any medical expenses you have that are covered by your insurance, will be paid by your insurance company.
Other Costs With Health Insurance
Your annual deductibles are usually paid to medical professionals, clinics, or hospitals. Once you meet your deductible, then there are only the other out-of-pocket costs to think about such as premiums, coinsurance, and copayments.
So even if you have paid your deductibles, your health insurance plan will typically not cover 100% of every medical expense you have. You may still have costs for things that are not covered by insurance. Or you may have coinsurance and copayments.
However, there are services that are fully covered by your health insurance plan once you meet your deductible. How exactly does it differ from other out-of-pocket costs?
Let us take premiums for example. Premiums are pretty much the monthly bills of your health insurance plan.
You pay for your deductibles to be able to use your insurance policy. On the other hand, premiums are mandatory monthly bills that you pay for even if you do not use your insurance policy.
Think of deductibles as yearly activation fees while premiums are your mandatory monthly bills.
You can also choose a no-deductible plan. However, the premiums for those will generally be much more expensive.
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