What is a Deductible on a Health Insurance Plan?
Learn more about the medical deductible and how it applies to your health plan.
Health insurance helps to cover the costs of medical treatment and care, but it can also be confusing to understand. If you have questions about medical deductibles, co-insurance, co-pays, and other commonly used terms in the insurance world, you’re certainly not alone. Here’s what the deductible on your health insurance is and what it means for your finances and health plan.
What is a deductible?
A deductible is the amount that you have to pay out of pocket before your health insurance plan will start paying for most covered medical treatments, procedures, and care. A health plan will typically have a single deductible, which applies to each individual on the plan, as well as a family deductible (if applicable). If your family is covered under one health plan, the deductible for each person would apply, but the amount you pay for each family member would go toward the family deductible.
For example, if you give birth to a child who is added to your health insurance plan, your medical costs would go toward your individual deductible and your infant’s medical costs would go toward their individual deductible. Both amounts would be applied to the family deductible. When the family deductible has been met, individuals no longer have to meet their own deductibles before the health plan pays on covered medical costs.
Whether you have your own individual plan and your own deductible or you have a family health plan with a family deductible, the amount of the deductible must be paid out of pocket before your health insurance will pay for most services, although some exceptions do apply.
The amount of your deductible is often linked to the cost of your insurance premiums. Plans with lower premiums tend to have higher deductibles, while more expensive insurance plans may have lower deductibles.
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As mentioned, there are some exceptions to whether an insurance plan will pay for services prior to the deductible being met. One of the most important exceptions is preventive care. The Affordable Care Act (ACA) regulates that most health plans must cover a set of preventive services, including certain health screenings, routine wellness check-ups, and vaccinations. Healthcare.gov breaks down what is included in the list of preventive services into three groups: all adults, women, and children.
As long as the preventive care you are receiving is included on the list and the rules of the ACA mandate apply to your health plan provider, this medical care is paid pre-deductible. This means that you don’t have to pay for the service out of pocket.
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If a procedure is covered, does my deductible apply?
It can be confusing when you find that a certain treatment or procedure is covered by your health insurance, only to learn that you still have to pay for it out of pocket. The deductible only applies to covered medical services. Even when your doctor or health insurance representative tells you that your service is covered, this doesn’t mean you won’t have to pay your portion. Covered medical services go toward the deductible until it is met. Medical services that are not covered by your plan do not go toward your deductible amount.
How do I know when I’ve met my deductible?
Your health plan will provide you with an Explanation of Benefits (EOB) every time you receive medical treatment and the insurance is billed. This EOB may be mailed to you or may be available as a paperless option through your online account or via email. You can review how much has been applied to your deductible on the EOB to help you understand what you may still be responsible to pay for out of pocket.