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What Does It Mean to Meet Your Deductible on Health Insurance?

Health insurance often has a deductible--an upfront cost that the insured person must pay before the insurance company will cover a cost. To meet a deductible on a health insurance plan, you must spend the full deductible amount sometime during the plan year. After a deductible has been met, you are typically not required to pay any more money toward deductibles until the next year.

  1. Function

    • Deductibles are fixed out of pocket costs that are stated plainly in an insurance policy. For instance, a health insurance plan might have a $1,000 deductible on all care other than normal doctor's visits (one or two doctor's visits are often included as part of heath plants without paying a deductible.). If you had to undergo a $5,000 surgical procedure, you would have to pay the first $1,000 to meet the deductible and then the insurance company would cover the remaining $4,000 based on the terms of your policy (for example, paying 80 percent of the $4,000). After meeting the deductible, you would not have to pay money toward the deductible for the remainder of the year for additional care. So if you had another $5,000 procedure that year, the insurance company would cover the full $5,000 based on your policy (for example, paying 80 percent of the $5,000).

    Considerations

    • A single heath insurance plan can have more than one deductible to meet. For instance, if you have a health insurance plan provided by your employer you might have a different deductible for yourself and your family. Even if you meet the annual deductible for yourself, you might have to pay extra to meet different deductible to cover other people on the insurance plan. Some plans may have different deductibles for different types of services.

    Size

    • The size of a deductible can vary greatly from one insurance plan to another. One insurance plan might only require a $500 deductible while another might have a $10,000 deductible. All else held equal, the higher the deductible is, the lower the cost of the insurance plan. Many people choose to take on higher deductibles to reduce the cost of insurance. According to the Washington Post, plans with "annual deductibles of at least $1,200 for individuals or $2,400 for families" are considered high deductible insurance plans.

    Potential

    • Choosing a high deductible health insurance plan can be risky because meeting the deductible is expensive. High deductible health insurance plans can, however, make you eligible for a health savings account. An HSA is a special tax advantaged account where you can set aside money to spend toward medical expenses in the future. HSAs can help policy holders afford the deductible and other health-related costs.

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