- Posted by Canopy KC
- On May 30, 2017
- 0 Comments
- buying health insurance, choose the right plan, Health Insurance Deductibles, premiums
Let’s face it, health insurance coverage is not cut and dried and definitely can be perplexing. Health insurance is a phrase that is defined by the collective definitions of several terms that believe it or not, you, as a consumer choose. Understanding your health insurance deductible is just a piece of the puzzle to becoming a savvy consumer. What does “deductible” mean? Follow this guide to learn some health insurance language and confidently gain an understanding of what your health insurance deductible actually is.
Deductible: A set dollar amount that a member must pay prior to the insurer making any benefit payments. This number is based on a percentage amount established by the member’s contract.
- Family Traditional Deductible: There are three parts to this type of deductible and is often a good choice for family’s with a lot of individual medical expenses.
- Individual Deductible: Each family member has an individual deductible that their out of pocket medical expenses are applied to. Once the individual deductible has been met, (depending on your coverage plan) the percentage benefits for that individual only will kick in for the remainder of the year.
- Family Deductible: The combination of all family members out of pocket expenses are applied to the family deductible. Once this dollar amount has been met, all family members receive the plan’s percentage benefits.
- Maximum Out of Pocket Expense: This dollar amount is based on the type of plan that you choose. Maximum out of pocket expenses are composed of the individual deductible, family deductible, prescription costs, and co-payments. Once this dollar amount has been met, the insurance plan will cover 100 percent of covered medical expenses.
- Aggregate Deductible: There is only one deductible for the entire family. The deductible can be met by one family member or a combination of family members. Once it is met, all family members’ medical expenses are covered at the same percentage rate. Typically, there is a maximum out of pocket expense associated with an aggregate deductible plan as well.
Example: Consider a family of four on a health insurance plan with a $3500 family deductible, $1500 individual deductible, and a $7000 maximum out of pocket expense. One family member meets the individual deductible, leaving medical expenses covered at an 80 / 20 percent coverage and the same will apply to each family member as their individual deductibles are met. Once the family deductible of $3500 is reached, the entire family’s medical expenses will be covered at a 90 /10 percent rate. When the $7000 maximum out of pocket expense is met, all family member’s medical expenses will be covered at 100 percent.
(The percentage coverage used in this example is based on a specific insurance contract and may not be the same for every contract.)
Co-payment: A co-payment is a flat fee that an individual pays for a service. For example, an office visit: $25 co-payment, a specialist: $50 co-payment, urgent care: $35 co-payment, emergency room: $300 co-payment and so on. Co-payments are applied to prescription coverage as well. Do not confuse co-payment and deductible. They are two different out of pocket expenses.
Premium: Dollar amount that is paid monthly by your employer and/or an individual in exchange for health insurance coverage. Do not confuse premium and deductible. They are two different out of pocket expenses.
Health Savings Account (HSA): A qualified HSA insurance plan allows individuals to invest tax free dollars into an account that is accessible to pay for qualified medical expenses. Typically, qualified insurance plans with an HSA have high deductibles and lower monthly premiums.
Here is where insurance coverage gets tricky.
- Raise the monthly premium, lower the individual or family deductible.
- Lower the monthly premium, raise the individual or family deductible.
- Lower the monthly premium, raise the individual or family deductible and use an HSA account to supplement.
Understanding how your deductible works is just a piece of the health insurance puzzle. If you would like more information, further definitions and tips, or help solving the puzzle, call one of our licensed agents at Canopy. Canopy is a personal comprehensive insurance provider that specializes in understanding your needs, taking the puzzle out of insurance and finding the coverage that’s right for you.