Deductible Health Insurance Plans

More and more people are opting to go with deductible health insurance plans in order to save on healthcare costs. However, many have difficulty understanding how these medical plans work. Read on to learn more information about deductible insurance coverage, including why people choose this type of coverage, what kind of out-of-pocket expenses you'll have, what benefits are subject to the deductible, and how to choose the righ policy for you and your family. 

Definition: A deductible is a dollar amount that must be reached before discount prices on healthcare are made available. These plans usually have three stages:

  • Stage 1: Before Reaching the Deductible

    During the first stage you pay full price for most or all healthcare expenses at the point of service. Some benefits may not be subject to the health insurance deductible; in this case, you pay coinsurance or copayments for these exempted services.
  • Stage 2: After Reaching the Health Insurance Deductible

    At this point, you receive discount rates on all covered benefits. You pay coinsurance or copayments for healthcare services.
  • Stage 3: After Reaching the Out-of-Pocket Maximum

    In this final stage you receive free coverage on all covered benefits at the point of service until the end of the calendar year. At the end of the year, the health insurance deductible and out-of-pocket maximum reset and you return to Stage 1.

Why choose deductible health insurance coverage?

Learning to find the right deductible insurance is one of the best ways to zero in on the coverage and cost that fits your needs. The top reason people switch over to these policies is to lower their insurance costs. Monthly premiums tend to be much more affordable on this type of coverage than on policies without a deductible. More and more people are choosing medium to high deductible health plans because that is the #1 most effective way to save money on medical insurance. On the other hand, some warn about getting coverage with a deductible that is too high.

How to Get the Most Savings

Some people choose Copayment Plans in order to have low cost health care expenses at the point of service, but many find that the monthly premiums on a deductible health insurance plan make coverage far more affordable. Health insurance deductibles usually range from $500 up to $10,000. Even low deductible policies like the $500 Plan offer some savings, but you'll tend to significantly decrease your costs by getting coverage with a deductible that is $1500 or higher. Another great way to save money on health care is to go with an HMO policy, but you will still be able to save by choosing a PPO deductible insurance plan.

Benefits Covered Immediately

On certain plans, some benefits are not subject to the health insurance deductible. For instance, on Kaiser Permanente's popular $30/$1500 Deductible plan, doctor visits and prescription drugs are covered right away with a copayment. Policies like this have certain benefits which are not subject to the deductible, such as office visits and RX coverage as mentioned above. When receiving these services, you simply pay a copayment, which is a lower amount than the full cost of the care provided. Usually, these copayments are not counted toward the medical insurance deductible.

After Reaching Your Deductible

Once you’ve paid out the full amount of your deductible, you only pay coinsurance and copayments until you reach your out-of-pocket maximum. The coinsurance that you pay varies by plan and carrier, but often ranges from 10% to 30%. Usually, you will pay coinsurance on expensive healthcare services such as hospitalization and surgery. Often, you will pay copays for lower cost services such as doctor visits, prescription drugs, lab tests and X-rays. Copayments for doctor visits usually range from $5 to $50. Copays for medications tend to range from $5 to $15 for generic drugs and from $15 to $40 for brand name prescription drugs.

Once the health insurance deductible is reached, all copayments and coinsurance payments add up toward the out-of-pocket maximum, or the copay limit. This amount tends to be between $2,500 on the low end up to $15,000 on the high end. The out-of-pocket maximum is your worst case scenario, the most that you would have to pay at the point-of-service during a calendar year. The monthly premiums for your coverage will continue, but beyond that, you will have 100% coverage on all your point-of-service expenses for benefits that are covered on your deductible health insurance plan.