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When it comes to paying for your health insurance there are three primary components: your deductible, your coinsurance and your monthly premium.
Let’s break this down and define deductible: Your health insurance deductible is the amount you must pay before the health plan starts paying for your covered care. For example, if your deductible is $5,000, your plan won't pay for some services until you've paid $5,000. However, 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?If you’re a health insurance pro, this is a term you already know. However, if you’re new to health insurance, then deductibles are something you should brush up on before you even start shopping. Keep in mind that generally, the higher your deductible, the lower your monthly premium, and 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 to choose 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 during the year.
On the other hand, if you know you won't use your insurance very much, you may want to choose 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.
Deductible vs Out-of-PocketHere is an example of how the deductible, coinsurance and maximum limit you would need to pay work together.
You have an insurance plan that has a:
At the start of each year, your deductible and coinsurance resets for the next plan year and the $5,000 deductible and 20% coinsurance starts again.
It gets a bit confusing, so if you still have questions or need clarification on anything, ask us in the comments!
Awesome! Thank you for sharing this since I am really confused about this deductible. We offered an insurance to our employees in Handyman Company and this is not cleared to us and we are not aware on how it works. I really appreciate this explaination.
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?
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