What Is a Deductible for Health Insurance and How to Limit Their Impact
Health insurance is in the news everywhere, and the biggest news of all is the dramatic increases in premiums. This leaves businesses and families in a dilemma over how to pay for health insurance. Policies for a family of four can range from $ 400 to $ 1,700 nationwide.
The wide range of premiums generally comes down to the annual health insurance deductible and out-of-pocket coinsurance maximum. Deductibles can range from $ 500 to $ 10,000 with out-of-pocket coinsurance ranging from $ 1,000 to $ 15,000. I’m sure you already guessed that if you want the low deductible plan you are paying a lot of money. If you cannot afford a lot of money, then you are stuck with a high deductible policy.
Just to make sure we all understand, let’s set a medical deductible. It is the monetary sum that you are billed first before the insurer begins to cover your expenses. So a simple example, you break your leg and the resulting medical bill is $ 7000. If your deductible is $ 1000, then you pay $ 1000 for your accident and the insurance company will pay a portion of the remaining $ 6000. If your deductible is $ 7,000 or more, you are out of luck, because your insurance company is not required to cover you for any medical emergency until your expenses exceed your deductible.
The second part of this is the insurance coinsurance maximum you pay out of pocket. Again, to make sure we understand, coinsurance is generally a percentage that you pay for your medical expenses up to your out-of-pocket maximum. The coinsurance percentage can range from 10% to 50% depending on your plan. Of course, the higher your premium, the lower your percentage. Using our same example with the $ 1,000 deductible, if your coinsurance percentage is 20% and the out-of-pocket maximum is Structural Warranty Insurance $ 5,000, then your remaining bill is $ 1,200 (20% times the remaining $ 6,000). So your total bill is $ 2,200 and the insurance company pays $ 4,800. On the other hand, if your coinsurance is 40% with a maximum out-of-pocket of more than $ 3,600, then your bill is $ 2,400 (40% per the remaining $ 6,000) plus your $ 1,000 deductible for a total of $ 3,400. In this case, the insurance company pays $ 3,600. Of course, if you had the deductible of $ 7,000 or more, the out-of-pocket maximum would not have mattered.
So to summarize, it is very important to understand how deductibles and coinsurance affect the way your insurance company covers your medical expenses. Here’s one way you can protect yourself against high premiums, deductibles, and coinsurance with a low-cost medical discount plan. These plans are available with different levels of coverage. Some plans come with extensive insurance-backed benefits for hospitalization, critical care, critical illness, accidental death and dismemberment, doctor and dentist visits, and accidental injuries, to name a few. One reason these plans have become so popular in recent years is that most benefits don’t even have deductibles. Plans like these generally cost a little over $ 200 for any family size and can be used to fill the deductible gap for high deductible insurance plans. Still, some businesses and families use them as standalone plans.