You have probably heard of the term ‘deductible’ if you own any insurance. However, do you know what it means? In the case of health insurance, a deductible refers to the amount that the policyholder should pay annually towards their medical expenses before the insurance provider starts to pay its share.
Consider a case where one has a cover with a $1500 deductible. Now let’s say that after a stay at the hospital, the policyholder has a medical bill amounting to $30,000. As per the terms of the health insurance policy, the policyholder is obligated to pay for the first $1500 while the insurance provider is required to pay for the remaining $28,500.
Health deductibles are designed to help reduce premiums by reducing the number of small claims as well as through cost-sharing. This is why individuals whose health insurance covers have a deductible do not go running to the hospital for every a runny nose, cough, bruise or bump.
Preventive care and deductibles
It is worth noting that not many preventive care services are subject to deductibles. This means that a policyholder is not required to pay anything towards their deductible for services like Ob/GYN visits, immunizations, screenings, well-child visits, annual physical exams and more. The idea is to encourage people to be proactive about ensuring optimum health by protecting it since the best ways to the most efficient ways to reduce the costs of hospital expenses, in the long run, are prevention and early detection.
Family plans and deductibles
It is important that one pay attention to the type of deductible that comes with their cover, especially if it is a family health plan. With traditional deductibles, it is easy to save on out-of-pocket costs where the family has a lot of medical expenses. This is because these deductibles contain the family and individual deductibles. The latter allows every member of the family to receive benefits from the cover provider before the family deductible is met.
Take the case of a family of three whose individual deductible is $1000 and family deductible is $4000. If one of the members of that family reaches $1000 in hospital expenses, the insurance provider is obligated by the policy to pay for his/her benefits for the rest of the year whether or not the family deductible of $4000 has been met. The rest of the family will only be eligible for benefits if the family deductible is met. On the other hand, a family is required to meet the agreed upon family deductible to receive any benefits if it has an aggregate deductible plan.