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Let’s break this down. Your health insurance deductible is the amount you must pay before the health plan starts paying for your covered care. So, if your deductible is $5,000, your plan won't pay for some services until you've paid $5,000. Keep in mind, all Health Insurance Marketplace plans and many other plans must cover certain preventive services without charging you a copayment or coinsurance. This is true even if you haven’t met your yearly deductible.
What is the right deductible for you? As a rule, the higher your deductible, the lower your monthly premium. So, the lower the deductible, the higher the premium.
There are a few questions you should ask yourself before buying health insurance. If you know you'll be using your insurance often, you may want a plan with a higher premium and lower deductible. This means you'll pay more each month, but the amount you pay when you go to the doctor will be less.
On the other hand, if you know you won't use your insurance very much, you may want to pick a plan with a lower monthly premium and higher deductible. This way you keep your monthly costs down by taking the chance that you may not need to pay your deductible.
Here is an example of how the deductible, coinsurance and out-of-pocket maximum work together.
An insurance plan has a:
This means:
At the start of each plan year, your deductible and coinsurance resets for the next plan year. That means deductible and coinsurance start again.
It gets a bit confusing, so if you still have questions or need help, ask us.
Originally published 1/13/2015; Revised 2018, 2023
Hi Mike- We completely understand this can be quite confusing. We've received your other questions as well. What I'd like to do is to have someone from my team reach out to you and explain how your policy works. Because each policy can differ with how the deductible is applied, I really can't give a one size fits all answer. If you would private message us with your policy ID and contact number, we'll give you a call to discuss. --Tonya
I thought the deductible counts towards your out-of-pocket maximum? So the third bullet point above looks incorrect to me. As the first bullet point says, you are responsible for 100% of your health care costs until you reach the $5000 deductible. Once you've paid your $5000 deductible, coinsurance will apply for future health care costs. Since the $5000 deductible applies towards the $6000 out-of-pocket maximum, you are responsible for at most $1000 of coinsurance then; not $6000 as the third bullet point says. Else, with the current example you would be paying $5000 towards the deductible plus $6000 coinsurance for a total of $11,000 out-of-pocket instead of the maximum of $6000. Is this right? Or am I missing something?
Thanks.