A deductible is the amount of money you pay out of pocket for certain covered health care services before your health plan starts to pay. Understanding how deductibles work may help you choose the plan that best fits your needs and budget.
You can think of your deductible as adding up throughout the year. As you start the plan year, you pay the full amount for your covered health care costs — until you meet you annual deductible. Each time you pay costs that count toward your deductible, it adds to the total amount you have to pay that year. When you reach the total deductible amount, your health plan will start to pay a portion of certain health care services for the rest of the plan year.
Keep in mind, your plan’s deductible starts over at the beginning of each plan year. And like most health care costs, your deductible may change each year.
Once you reach your deductible, you may still have to pay a few separate expenses for your health care. These are commonly called “out-of-pocket costs,” and they don’t count toward your deductible. They include things like:
Some plans have a separate medical and prescription deductible. You meet your medical deductible through costs related to medical services (like a doctor visit). With a prescription deductible, only prescription costs count toward meeting your deductible. A prescription deductible can apply to some or all of your plan’s covered medicines.
Certain types of plans have a network and out-of-network deductible. Any network care you get counts toward your network deductible, while out-of-network care counts toward your out-of-network deductible. If your plan covers both network and out-of-network care, you may have a deductible for each.
An individual health plan only has one deductible — for you. But what happens when you’re on a family plan? Family plans can have individual and family deductibles that are either called an aggregate deductible or embedded deductible.
A high deductible health plan (HDHP) is a type of plan that has a higher deductible than many other plans. With an HDHP, the tradeoff is you spend less on your monthly premium, but you pay more for health care services before your plan starts helping out.
An HDHP may be a good fit if you’re pretty healthy and rarely have to see your doctor. On the flip side, it can also be a good fit if you’re anticipating high-cost care early in your plan year. In some cases, high-cost care can help you reach that deductible quickly, making your plan cover costs moving forward. Advantages of a high deductible health plan include:
High deductibles can come at a cost. If you end up using more care than you or your family planned, you may end up paying more than you budgeted for. Disadvantages of an HDHP can include:
Low-deductible health plans have a higher upfront monthly premium and a lower deductible, in which health insurance payments start earlier. They may be a good fit for individuals or families who see the doctor often or anticipate needing lots of care during their plan year due to a pregnancy, an upcoming procedure or surgery or a chronic condition. With a lower deductible amount to reach, your plan will likely kick in sooner compared to a HDHP.
There’s a lot to consider when choosing a health plan — and a plan’s deductible can be a determining factor for many people. Keep in mind, there’s no “right” plan. Everyone’s situation, budget and care needs are different. Think about things like how often you see your doctor, if you can cover the out-of-pocket maximum, or if you anticipate high-cost care in your plan year.
ON-SCREEN TEXT: [How do deductibles work?]
Knowing how deductibles work can help you choose a health plan that's right for you.
ON-SCREEN TEXT: [Deductible
the amount you pay before your plan begins to pay]
Let's start with the basics. A deductible is the amount you pay for out-of-pocket costs for your covered health care before your plan begins to pay. A deductible is different than a premium.
ON-SCREEN TEXT: [Premium
the amount you pay to have health insurance]
A premium is the amount you pay, usually every month, to have health insurance.
ON-SCREEN TEXT: [High deductible
Low deductible]
Now, deductibles may be low or high, depending on the plan you choose.
ON-SCREEN TEXT: [High deductible
Low premium]
With a high-deductible plan, you may pay less each month for your premium and more for your out-of-pocket costs until you pay 100% of your deductible.
ON-SCREEN TEXT: [Low deductible
High premium]
With the low deductible plan, you may pay more each month for your premium and less of your out-of-pocket costs until you pay 100% of your lower deductible.
ON-SCREEN TEXT: [High deductible You pay 100%
Low deductible You pay 100%]
Whether you have a high or low deductible, you will start each plan year by paying 100% of your covered health care services until you meet your deductible.
ON-SCREEN TEXT: [Deductible]
You could pay 100% of your deductible in several smaller visits or one big visit.
ON-SCREEN TEXT: [Which deductible is right for you?]
So, which deductible is right for you?
ON-SCREEN TEXT: [Generally healthy
Low health care costs
High deductible plan]
If you're generally healthy and don't think you'll have many health care costs in the next year, then a high deductible plan may be right for you.
ON-SCREEN TEXT: [High deductible
Low premium]
That means you would pay a lower premium each month and pay for the care you need through your deductible. To help you save up so you're prepared to pay your deductible, some high deductible plans can be paired with a health savings account, or HSA.
ON-SCREEN TEXT: [Health savings account (HSA)]
With a HSA, you can set aside pre-tax dollars to help you pay for your deductible for qualified medical expenses.
ON-SCREEN TEXT: [High deductible]
Keep in mind that HSAs are only for people who have high deductible plans.
ON-SCREEN TEXT: [Need regular health care
Large family
Chronic conditions
Low deductible plan]
On the other hand, if you typically need regular health care, have a large family or chronic condition, you may prefer a low deductible plan.
ON-SCREEN TEXT: [Low deductible
High premium]
You'll pay more for your premium each month, but less for your health care expenses with your lower deductible. Paying more each month can help you save on out-of-pocket costs and may help you better manage your budget. Now that you know more about deductibles, you can make the most of your benefits with the type of plan that best fits your needs.
ON-SCREEN TEXT: [So you can experience what care can do for you]
So you can experience what care can do for you.
