UNDERSTANDING YOUR DEDUCTIBLE
UNDERSTANDING YOUR DEDUCTIBLE - WHAT IS A DEDUCTIBLE? “What is a deductible?”, is another one of the common questions that we get each week. This blog is part of our two-minute Tuesday video series where we are answering common questions in health insurance. The importance of understanding your deductible and how other features of your policy function is important in order to save yourself time, stress, and money. The deductible of an insurance policy is not the same for every individual. In most cases, the deductible has a direct correlation with the cost of the health insurance. Most people come to us with a preference on their deductible. People who typically use their health insurance more often are more likely to want a lower deductible. On the other hand, individuals who use their insurance less often are more likely to want a higher deductible. Qualified High Deductible Plan (QHDP) In years past we have seen people opt for a qualified high deductible plan. This option is often paired with an HSA to fund a separate account to help pay for medical expenses. The money put into an HSA is the individuals to keep regardless if they use it throughout the year. The money put into the HAS is also tax deductible. But, over the last year we have seen less and less of these options being offered by carrier. What counts toward a deductible? What counts and what doesn’t count towards your deductible is important to understanding your deductible. Not all health insurance policies work the same, therefore this question is not answered the same for everyone. There are different exclusions that apply on different policy’s. But, in most cases the out-of-pocket cost of things that are subject to deductible come from in-patient hospitalization, out-patient hospitalization, x-rays, and professional services. Catastrophic polices do not provide co pays until the deductible is met. Whereas, most plans give “first dollar benefits”, this means that the policy gives co pays at a doctor office and prescription benefits, day 1. Maximum out of Pocket When explaining how a policy works we often get the question of, “What is the difference between max out of pocket and deductible?”. It is easier to start with, "what is co-insurance". Co-insurance is the percentage that is required by you to pay after the deductible is met up to the max out of pocket. These co-insurance percentages vary, often times they are 70/30 or 80/20. For example, if you need a surgery that is subject to your deductible and the surgery is $8000. With a $5,000 deductible you are responsible for the first $5,000, then 20% up to the maximum out of pocket. If you ever incur your maximum out of pocket for the year you no longer pay out of pocket towards a deductible. Recap The key to understanding your deductible and how your health insurance policy works is to start with the basics. It is always a great reminder to look over some of the simple questions that we get everyday. The more you can comprehend, understand, and retain what is a deductible and how it works, the more money that will be in your pocket at the end of the day. If this blog has raised questions about how your current policy works, or you want to look into a policy with a different deductible, max out of pocket, or co insurance. Please contact us today!

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