What is a health insurance deductible?

Very few medical insurance policies will pay 100% of your medical expenses. Many people will ask their agent “what is my doctor’s office visit co-pay?” but will fail to inquire about the other charges they might have to pay. You will probably have to pay a deductible, a co-pay and/or coinsurance when presented with a healthcare expense.

How a health insurance deductible works

If a given expense is subject to your deductible, you will have to pay your deductible before the insurance company pays anything towards that expense. Deductibles only need to be met once per year. The year typically starts on January 1st, and not when your policy became effective.

Here is an example of a deductible on a plan from Blue Cross Blue Shield with a high deductible of $5,000: If the insured had a $2500 emergency room visit in January and another visit that cost the same in February, if both of those visits were subject to the deductible, the insured would pay for both of them. At that point the deductible would be met. Any similar expenses incurred for the rest of the year would be covered at least partially by Blue Cross Blue Shield.

Health Insurance Coinsurance

Coinsurance is based on a percentage of an expenses. This is different from a deductible or a co-pay which is based on a flat amount. If your coinsurance is 20%, you will probably be subject to 20% of your expenses after you have paid your deductible until you have met your maximum out-of-pocket amount.

For example if you have a $1,000 deductible on your policy, a 20% coinsurance and a $2,000 maximum-out-of-pocket amount: You will pay the first $1,000 of our medical expenses per year, then you will pay 20% of any other charges until you have paid an additional $2,000 or in some cases an additional $1,000. Some companies include the deductible in the maximum-out-of-pocket amount and some do not.

Health Insurance COo-pays (or copays).

Co-pays are paid per incident. You might pay $30 for each doctor’s visit or $20 for every one-month’s supply of a prescription. Some policies will ask you for a to pay your deductible and co-pays for the same expense. Some will waive the deductible for certain expenses such as prescriptions and physician visits.

Co-pays are not typically limited by the maximum-out-of-pocket amount.

Similar sounding insurance policies can very different. Make sure you understand how your policy works. A low deductible health insurance in North Carolina or a low cost no deductible health insurance in Georgia may have other cost shares, such as high coinsurance amounts or big copays. Be sure to ask plenty of questions or read the literature thoroughly before buying. You want to know what a policy will do before you buy it, not after you have an expense that you think will be covered.