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Things to Know About Health Insurance Deductibles

Health insurance deductibles are a condition of many health policies written across the country. A deductible is the amount of money that you as a policy owner are required to pay for medical services before the terms of your policy become effective. It's important that you review the details of your health insurance policy to determine how your deductible is accumulated and what your policy covers once it is met.

  1. Deductibles Must Be Paid

    • Every penny of your insurance deductible must be paid before your insurance company will extend any benefits. To this end, it makes sense to secure a health insurance policy with the lowest deductible possible to begin receiving benefits more quickly. A lower deductible means a higher monthly premium, which over the course of a year, can actually be more expensive than if you had simply gone with a higher deductible. It is also important to consider what procedures contribute to your deductible. If you have medical procedures performed on you that are outside the scope of your policy, you'll end up paying for the total cost of the procedure without contributing to your deductible for the year.

    Meeting Your Deductible and Paying Bills

    • Families that are self-insured may pay thousands of dollars a year in health insurance premiums and never reach the deductible for the policy. This is because even while you're paying your monthly premium, which could be $500 to $600 a month for a family of four, you're still responsible for all your medical bills until the deductible is reached. As health insurance writer C.D. Richard points out in "The Truth About Deductibles," meeting your deductible is only the beginning. Even after your deductible is met, you may be responsible for co-payments and co-insurance payments for covered medical treatments.

    Tax Considerations

    • There is a silver lining if you are paying for your insurance expenses completely out of pocket. According to the IRS, if you are self-employed and not eligible for a group health insurance plan through any avenue of employment, your insurance expenses may act as a tax deduction. This includes the deductibles you pay as a condition of your health insurance policy. Additionally, accident and health insurance premiums paid by you as the owner of a sole proprietorship are also tax deductible.

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