A deductible is the amount of money you have to pay out of pocket before your insurance company starts paying for your medical expenses. Deductibles are a common feature of health insurance plans, and they can have a significant impact on your insurance premiums.
In general, the higher your deductible, the lower your insurance premium will be. This is because insurance companies use deductibles to spread the risk among their policyholders. With a higher deductible, fewer people will file claims, which means that the insurance company can charge lower premiums to everyone.
Of course, there is a trade-off. With a higher deductible, you will have to pay more out of pocket for your medical expenses. If you have a lot of medical expenses, a high deductible could end up costing you more money in the long run.
What Deductible Is Right?
So, how do you decide what deductible is right for you? There is no one-size-fits-all answer, but there are a few things you can consider:
- Your budget: How much can you afford to pay out of pocket for your medical expenses?
- Your health: How often do you see the doctor? If you have a chronic condition, you may want to choose a lower deductible so that you don’t have to pay a lot of money for your medical care.
- Your lifestyle: If you are active and participate in risky activities, you may want to choose a higher deductible so that you don’t have to pay a lot of money for high-cost medical care.
Once you have considered these factors, you can start to compare different insurance plans and find one that has a deductible that fits your needs and budget.
Things About Deductibles
Here are some additional things to keep in mind about deductibles:
- Pre-existing conditions: If you have a pre-existing condition, you may not be able to choose a plan with a high deductible. This is because the Affordable Care Act requires all health insurance plans to cover pre-existing conditions, regardless of the deductible.
- Coinsurance: In addition to a deductible, many health insurance plans also have a coinsurance requirement. Coinsurance is the percentage of the cost of your medical expenses that you are responsible for paying after you have met your deductible. For example, if your plan has a 20% coinsurance requirement, you will be responsible for paying 20% of the cost of your medical expenses after you have met your $1,000 deductible.
- Out-of-pocket maximum: The out-of-pocket maximum is the most you will have to pay for your medical expenses in a year. Once you have reached your out-of-pocket maximum, your insurance company will pay 100% of the cost of your medical expenses for the rest of the year.
By understanding how deductibles work, you can make an informed decision about which health insurance plan is right for you.