What Happens When I Hit My Deductible for My Health Insurance?

Health insurance is something that confuses many people. People understand they need it, but they don't necessarily understand how it works. This is especially true about the deductible portion of an insurance plan. Several different types of insurance plans require deductibles. Medical Savings Accounts (MSAs), Consumer Driven Health Plans (CDHPs), Indemnity Plans and High Deductible Health Plans (HDHPs) all require some sort of deductible. Since these plans are growing in popularity with employers, knowing how a deductible works is important.

Deductibles Explained

• When trying to figure out how a deductible for health insurance works, think about the deductible for your car insurance. If you are in a collision you caused or you hit a tree and damage your car, before your insurance company will pay to repair your car, you have to pay them a certain amount of money up front. This amount is called the deductible. For most standard policies, the deductible is $500.

  Health insurance deductibles vary from plan to plan. For example, a deductible for a CDHP or HDHP might be $2000 for an individual and $10,000 for a family, while the deductible for an indemnity plan might only be $1000. However, no matter the plan, the deductible definition is the same. The deductible is the amount an insured person must pay before their insurance plan starts to pay toward medical bills. For example, if your insurance coverage has a $1000 deductible, you would have to pay the first $1000 worth of medical bills before your health insurance coverage kicked in. Once the deductible has been met, the insurance plan would start to pay the medical bills, either the entire amount or the agreed upon percentage.

  Another thing to remember about deductibles: the higher the deductible, the lower the monthly premium. So, if cost is a factor, a plan with a high deductible and a lower monthly premium may help you to afford coverage for you and your family.