What out-of-pocket expenses can you expect after you reach your insurance deductible? Here’s everything you need to know!
After you pay your deductible, your insurance starts paying toward covered care you receive for the rest of the year. Additionally, depending on the service, the health care provider, and your insurance, you may have a copayment for any covered care you receive.
What is a deductible and how does it work?
Your deductible is the amount of money you pay out-of-pocket for covered benefits before your insurance company pays anything. This excludes certain preventative services all plans must pay the full cost of.
If you have a deductible of $2,000, you will pay 100% of your health insurance bills for covered services until you’ve paid your $2,000 deductible out-of-pocket. Once you’ve paid $2,000 and reached your deductible, your insurance company starts picking up the bill.
You will typically share the cost of the rest of your covered services you receive in the coverage year with your insurance company by paying either a copayment, also referred to as a copay, or a coinsurance.
Keep in mind that some plans have separate deductibles for certain services. Like prescription drugs for example; your plan may have a separate deductible you must reach before your insurance starts paying for prescriptions.
Additionally, if you have a family plan you can expect to have two deductibles. You can expect to have both an individual deductible and a plan deductible you must reach before your insurance starts paying for care.
For example, let’s say you have an individual deductible of $500 and a family deductible of $1,200. Let’s say that you have a health care bill for $600 for yourself. You would pay $500 toward your deductible, and your insurance would cover the remaining $100. Later in the year, let’s say your partner incurs a bill of $400. You would have to pay that out-of-pocket, but it would go toward your family deductible. Later in the year if a dependent receives care that costs $300, you would only pay $200 out-of-pocket as you’ve reached your family deductible of $1,200. Now that you’ve reached your family deductible your insurance would pay for any other health care you receive until the end of the plan year apart from any copays or coinsurances you may have.
What is a copayment?
A copayment, or copay, is a fixed amount of money you pay for a covered health care service. The amount can vary by the type of service.
Your health insurance plan determines what your copay is for different types of healthcare services, which you typically pay at the time you receive the service.
You may have a copay before you pay your deductible, after you pay your deductible, and when you owe coinsurance depending on your plan.
What is coinsurance?
Coinsurance is the share of the cost of a covered health care service that you pay after you’ve reached your deductible. It’s usually figured out as a percentage.
Once you’ve met your deductible, instead of paying 100% of the cost of a service you only pay a percentage. Your insurance company pays the rest.
For example, if you receive a health care service after reaching your deductible that is $1200 and you have a 20% coinsurance, you will pay $240 and your plan will pay the remaining 80% – which in this example is $960
Is there a limit to what I have to pay out-of-pocket?
Yes. Every year an out-of-pocket maximum is placed on both individual and family plans. This is the most you have to pay out-of-pocket for covered services during that plan year.
After you spend this pre-determined amount of money on deductibles, copays, and coinsurance, your health insurance plan picks up 100% of the cost of covered benefits.
Keep in mind that an out-of-pocket maximum does not include your monthly premiums. It also doesn’t include any money you pay out-of-pocket for non-covered services.
Should I choose a high or low deductible plan?
There are both plans with high and low deductibles. There are some plans – typically HMOs – that don’t have deductibles at all.
While a lot of people are initially attracted to the high-deductible plans because they tend to have lower premiums, that doesn’t always make them the most cost effective. High-deductible plans are great for people who are generally healthy and don’t expect to need a lot of health care services during the plan year.
You may end up spending more over all with a high-deductible plan than a low-deductible plan. While your premium is likely to be lower, you may end up paying a lot out-of-pocket toward your deductible if you end up requiring more or more complicated care than expected.
Low-deductible plans may seem pricey at first because they tend to have higher premiums. However, if you expect to require a lot of medical care throughout the year, have a chronic illness, or dependents to worry about, you may find that a plan with a lower deductible would better suited for your budget.
When choosing a plan reflect on the care you – or you and your family – has needed in the past and think about the health care services that you may require in the upcoming year.