If you have spent any amount of time looking at potential health insurance plans, it’s likely you’re a bit confused about some parts. Most people tend to have trouble understanding the difference between a health insurance deductible and an out-of-pocket maximum.
It’s important to realize that you will reach your health insurance deductible first. All the fees after your deductible are added on top of the deductible amount until you reach your out-of-pocket maximum. Now that you understand this basic concept, let’s move on to defining each one of these factors.
Health Insurance Deductible
Your deductible is the amount of money you are expected to pay each year before your coverage kicks in. Once you reach your deductible amount, your plan will start to pay for a portion of your medical services for the remainder of the year. You will still be responsible for copays. For example, if you have a $1,000 health insurance deductible, you will be required to pay for all your medical services until you reach the $1,000 limit.
Each insurance plan comes with its own deductible amount. Some plans may cover certain services, such as annual checkups or preventative care before you meet your deductible amount. Others may require different deductible amounts for specific services, such as prescriptions. Again, every policy is a bit different.
Once you reach your deductible, you will continue to pay a portion of all medical expenses. These are in the form of copays. Your insurance company will track the amount of out-of-pocket fees (copays) you pay out during the year. When the total amount of copays plus the deductible reach an amount equal to your out-of-pocket maximum, you will no longer be responsible for your medical services payments.
When you reach this maximum, your insurance company will cover 100 percent of all medical service costs for the rest of the year. For example, let’s say you have an out-of-pocket maximum set at $2,000. You reach your deductible of $1,000 and continue to pay a partial copay amount for all your medical services. Once your copays add up to $1,000, meaning a total of $2,000 with your deductible and copays, you reached your out-of-pocket maximum. At this point, you no longer have to pay out for medical services for the rest of the year.
Important Facts To Known
One of the requirements of Obamacare is that every health insurance plan must have an out-of-pocket maximum. The Federal Government sets the maximum amount that an insurance company may use as an out-of-pocket maximum. These vary depending on whether the plan is for an individual or a family.
- $6,850 Individual Plan
- $13,700 Family Plan
For family plans, the individual plan amount is utilized if a person on the plan has reached the individual maximum. For example, if you have a family plan with four members and one of those members has reached an out-of-pocket maximum of $6,850, the insurance company must pay all continued medical expenses for the rest of the year.
Another vital fact to know is that insurance plans are not required to have a deductible. This means your insurance company may partially pay for all medical expenses leading up to your out-of-pocket maximum, which then they would start paying the full amount.
Optimizing Your Deductible
When it comes to reaching your insurance deductible, you want to make sure that every dollar you spend is put towards it. By following these simple practices below you can ensure your money is being used towards your deductible amount.
- Only In-Network Providers Count Towards Your Deductible
- Before Seeing A Specialist Ensure Your Insurance Company Doesn’t Need Prior Authorization
- Plan Medical Expenses (Births, Surgery, Other Procedures) Ahead Of Time And Ensure They’re Covered By Your Insurance
- Use Your Free Preventative Care Services As They Can Catch Small Medical Issues Before They Become A Big, Expensive Problem In The Future
Choosing your health care policy or just understanding your current policy can be challenging. By taking the time to fully research terminology and other factors in your plan you can be better informed. This can save you money and a lot of hassle further down the road.