What is a Health Insurance Deductible?

When it comes to paying for your health insurance there are three main parts: Your deductible, your coinsurance and your monthly premium.

Your health insurance deductible is the amount you must pay before the health plan starts paying for your covered care. So, if your deductible is $5,000, your plan won't pay for some services until you've paid $5,000. Keep in mind, all Health Insurance Marketplace plans and many other plans must cover certain preventive services without charging you a copayment or coinsurance. This is true even if you haven’t met your yearly deductible.

What is the right deductible for you?
As a rule, the higher your deductible, the lower your monthly premium. So, the lower the deductible, the higher the premium.

There are a few questions you should ask yourself before buying health insurance. If you know you'll be using your insurance often, you may want a plan with a higher premium and lower deductible. This means you'll pay more each month, but the amount you pay when you go to the doctor will be less.

On the other hand, if you know you won't use your insurance very much, you may want to pick a plan with a lower monthly premium and higher deductible. This way you keep your monthly costs down by taking the chance that you may not need to pay your deductible.

Deductible vs Out-of-Pocket

Here is an example of how the deductible, coinsurance and out-of-pocket maximum work together.

An insurance plan has a:

• $5,000 deductible
• 20% coinsurance
• $6,000 out-of-pocket maximum

This means:

• You must pay the first $5,000 of most of your health care costs. This deductible amount is applied toward your out-of-pocket maximum. Remember, you don’t have to pay all of your deductible to have certain preventive services covered without being charged.
• After you have paid the $5,000, your plan pays 80% of the costs and you pay the other 20% (coinsurance).
• When the amount of deductible and coinsurance you've paid reaches $6,000, the plan covers 100% until your "plan year" renews. A plan is active for one year at a time.

At the start of each plan year, your deductible and coinsurance resets for that plan year. That means your deductible and coinsurance start again.

Understanding what you will pay when getting care can be a bit confusing. If you have questions or need help, just ask us.