Having a firm understanding of your health insurance policy and everything that it entails is vital. By having as much information as you can before you sign up for a plan, you can choose a policy that will best meet your needs.
When it comes to health insurance, two of the most important things that you should be concerned about include:
- What services the policy covers
- The plan’s out-of-pocket expense
As a policy holder, your top priority should be selecting a health insurance plan that will cover the treatments and services that you require; however, it’s just as important to ensure that you can comfortably afford your coverage. When determining the cost of your deductible, there are two factors to consider: deductibles and premiums. Below, we’ll define the latter of these two factors and briefly touch on premiums, as well, so you can get a better understanding of the cost of health insurance coverage.
What is a Deductible?
A deductible refers to the amount of a health insurance claim that you are responsible for paying before your health care company will kick in and cover any of your expenses. Once your deductible is met, your insurance will go into effect, covering any additional claims that may be filed; in other words, your deductible is your out of pocket expense for your health insurance coverage.
How a deductible affects your coverage depends on your insurance company and your specific policy; however, generally, for healthcare, the cost is usually spread out over the span of a year. Once your deductible is paid for the year, the insurer will cover any claims that are filed thereafter, until the year is has ended. For example, if your deductible is $3,000, you would be responsible for paying the first $3,000 in covered expenses before your policy kicks in. Once your deductible is paid, you will likely only be responsible for the copayment for any services that are covered by your plan and your insurer will pay the remaining amount; however, do note that every insurance policy is different, so it’s important that you speak to the company that will issue the insurance policy you are interested in purchasing so that you can fully understand the details regarding deductibles for your specific coverage.
Your deductible will also indicate how much your premiums are, or what you will have to pay for your insurance coverage, typically on a monthly basis. While a lower deductible may mean that your insurance will cover claims sooner, the amount you’ll pay for your premiums will be higher.
Types of Deductibles
It’s important to understand that not all deductibles on health insurance policies are the same; additionally, it is likely that you will have more than one type of deductible. The following types of deductibles are common with health insurance coverage:
- Individual/family deductibles
- In-network and out-of-network deductibles, meaning that individual deductibles are applied to the treatment you receive and whether those treatments are given from providers that are in your network or out of your network.
- Prescription medication deductibles, which you must meet before your benefits will be applied to any medications your doctor may prescribe.
Understanding Deductibles and Premiums before you Purchase Health Insurance
As mentioned above, the higher your premiums are, the lower your deductible will be, and the lower your premiums are, the higher your deductible will be. A lot of people tend to focus on their premiums when selecting their coverage; however, it’s important to be mindful of your out-of-pocket costs and what you will be responsible for paying should you need medical treatment. Generally, you will not know how much your medical care will cost until after you receive it. Whether your bill is under $100 or several thousands of dollars, if you have not met your deductible, you will be responsible for paying the entire amount of your care. Therefore, it’s important that you look for health insurance that has a premium and deductibles that you can afford to pay.
A good rule of thumb is to consider how much medical care you think that you will require over the course of a year; additionally, you should consider whether or not you would be able to handle the cost of a high claim before your benefits kick in.
Finding a Healthcare Policy You Can Afford
Medical care is vital for your overall health and well-being, and health insurance is crucial for your medical care; however, it’s important that you find a policy that you can comfortably afford. To find a policy that will offer you the cover that you need at a price that works with your budget, speak to a reputable agent that specializes in health insurance. Together, you can discuss the different options that are available to you.