Health Insurance Deductible: How To Choose, Premium Vs Coinsurance

Health insurance is important for medical expenses. You buy a customizable policy, and your insurance provider pays for medical care.

However, health insurance deductibles may mislead you when shopping for a policy.

Knowing how a health insurance deductible works will help you compare and pick the best plan while keeping your expenses in mind.

What Is a Health Insurance Deductible?

Health insurance deductibles are specific amount you pay for medical expenses before your insurer pays the rest. A bigger deductible lowers your insurance premium (i.e., monthly payments). You will pay more out of pocket than the insurance covers if you need medical treatments regularly.

Your insurance won’t cover medical expenses unless you hit your deductible. You will pay the whole $450 if your medical procedure costs less than your $500 deductible.

How Do Health Insurance Deductibles Work?

Health insurance deductibles are agreements between you and your health insurance provider. So you agree to bear some of the costs of your medical services, and your insurance provider agrees to cut your insurance premium.

Here is a brief overview of how a basic health insurance plan with a deductible works:

• You purchase your health insurance policy and set a deductible of $300.
• Your initial premium price is lowered due to purchasing a deductible package.
• You need medical attention for a procedure which costs $1,000.
• Out of the full costs of €1,000, you pay your $300 deductible.
• Your insurance provider pays the remaining $700 of your medical costs.

Please note that you can choose your deductible amount, or your insurance plan may already have a set amount. Before buying your health insurance plan, you need to discuss this with your insurance provider. Some insurance companies may not offer plans with a deductible at all.

Is It Better to Have a High or Low Insurance Deductible?

The answer depends on your medical condition, medical history, and finances. You should consider how often you visited your doctor last year and whether you could pay your deductible for that many appointments.

Your health insurance will be cheap with a large deductible. However, only young, healthy, energetic people benefit from high-deductible plans. If you get sick regularly or have pre-existing diseases, a higher deductible will cost you money.

Types of Health Insurance Deductibles

Types of deductibles change based on your health insurance company, country of residence, and health insurance plan, but you will come across the following types:

• Individual deductible. If you have single coverage, you pay only an individual deductible as required by the number of medical expenses you incur.
• Family deductible. For family insurance policies, there are two types of deductibles:
• Non-embedded, in which you pay one deductible for the whole family.
• Embedded, where you pay an individual deductible for each family member included in the insurance plan.

Deductible VS Premium

The deductible is the amount you pay at the doctor, and the premium is the cost of your health insurance policy. Your insurance premium is paid regularly, but your deductible is paid when you get sick.

You get an insurance policy with a $300 monthly cost and a $500 deductible. You pay $300 per month for health insurance, yet you spend $500 when you require medical care. If your medical bills exceed $500 (your deductible), your insurance coverage (for which you pay $300 per month) will cover the balance.

Health Insurance Deductible VS Coinsurance

Some health insurance policies have deductibles and coinsurance. After meeting your deductible, coinsurance means you and your insurance company divide medical expenditures. Your provider can set coinsurance charges in numerous ways to suit you. Coinsurance rates vary, but your insurance company pays 80% and you 20%.

Example of a health insurance plan with a deductible and coinsurance:

• You purchase an insurance policy with a $300 premium and a $500 deductible.
• You incur medical costs of $3,000.
• You pay your deductible of $500 first.
• Then you pay your coinsurance percentage. In this example, your coinsurance rate is 20/80.
• You pay 20% of the remaining amount ($2,500), and your insurance policy pays the remaining 80%.

With coinsurance, you’ll be required to pay your percentage until you reach a certain amount, after which your insurance company will cover 100% of the costs (out-of-pocket maximum).

Deductible VS Out-of-Pocket Maximuma

Your deductible, coinsurance, and copayments make up your annual out-of-pocket maximum. Once you reach this amount in a year, your insurance provider will pay the rest.

Example: Your insurance plan has a $5,000 maximum out-of-pocket cost. If you attain this amount by requiring many medical treatments in a year, your health insurance company covers the balance of the year.

Note that after the year, payments resume, so you must pay your deductible and coinsurance. Not all insurance policies follow the calendar year; check with your provider.

Tips When Choosing a Health Insurance Deductible

It’s important to keep in mind the following things when purchasing a health insurance plan with a deductible:

• Know your insurance coverage areas – Check to check which services are covered by your health insurance plan and which you may not have to pay for at all. If you frequently use certain free services, such as preventive care, you can select a higher deductible and save money on your insurance premium.
• Keep track of your medical history – If you know you will need a more expensive procedure in the coming year, you may wish to establish a lower deductible before purchasing your coverage. You may have to pay a higher insurance premium, but if the procedure is costly, you will save money in the long run.
• Compare health insurance plans – Shopping around and comparing as many health insurance coverage as possible is always a smart idea. This manner, you may compare what different providers have to offer and determine which one best meets your financial needs.