What Does $500/$1500 Deductible Mean?

Selecting a health plan is an important choice for employers who offer them as benefits to their workers and employees who need to choose among the options an employer makes available. In each case, the choice of a health plan balances cost with varying levels of coverage. Numbers in the names of health plans, such as a 500/1,500 deductible plan, signify how much you can expect to pay, and receive in coverage, from a given plan.

Meaning

• The insurance company pays for a fixed percentage of most types of care. The number 500 refers to the fact that the insurance company pays the first $500 for each claim. The $1,500 refers to the maximum amount the customer will need to contribute, in the course of a calendar year, as a deductible to cover medical expenses. However, this does not mean that $1,500 is the customer's maximum payment for all services.

Copayments

• Health plans with 500/1,500 deductibles also feature copayments, which customers must pay for each doctor visit, hospital stay and certain prescription drugs. The customer's maximum annual copayment is a different number, often much larger than the $1,500 maximum deductible, which only applies to certain types of treatment. For example, a 500/1,500 deductible health plan may also have a $7,500 copayment maximum, which means a customer's total liability for the year could be as high as $9,000 ($7,500, plus the $1,500 deductible maximum) in a year that includes major medical needs.

Individuals vs. Families

• Health plans use numbers such as 500/1,500 deductibles to refer to the costs for individuals who receive coverage through the plan. For families, where multiple family members receive the same coverage and contribute to the same deductible maximum, these numbers are usually higher. For example, a 500/1,500 plan may have a $1,000 first dollar service limit and a $3,000 annual medical deductible maximum for customers who include coverage for their families, though the plan will maintain its 500/1,500 name.

Considerations

• Health plans with 500/1,500 deductibles are typically available through employers alongside plans with other first-dollar service limits and maximum annual deductibles. Different 500/1,500 plans offer different coinsurance percentages, which refer to the percentage of care costs the insurance company pays. Customers can also add dental or vision care to most 500/1,500 plans, giving them added flexibility for individuals and families with various health needs.