When you are shopping for health insurance, there is one term that you will hear very often. It is deductible. But what is a health insurance deductible, how does it work, and most importantly, will it benefit you or not?
Health insurance doesn’t come cheap, so you need to make sure the deductible helps you in paying your monthly insurance premium instead of giving more burdens to you. It means, you need to understand everything about deductible. So, what is a health insurance deductible and how can you use it for your advantage? Let’s find out the answer below.
What Is a Health Insurance Deductible? – A Brief Explanation
You know that when you have health insurance, the insurance company will help paying some parts of the medical expenses. However, the company will not start paying right away. They will start paying only when you have paid the medical bills with your own money in a certain amount. That amount is called deductible. To put it short, deductible is the amount of medical expense that you need to pay with your own money before the insurance company starts to pay.
What Is a Health Insurance Deductible? – Understanding How It Works
Let’s say that your policy has a $2,000 deductible. It means, before the total of your medical bills reach $2,000, you need to pay everything by yourself. Now, what will happen when the $2,000 has been reached?
Well, the insurance company certainly will start joining forces with you to pay for your medical expenses. However, there are some different options on how you and the insurance company share the cost. Firstly, it is called copayment. When you choose this option, there is a certain fixed amount that you need to pay. No matter how cheap or expensive your medical bill is, the amount of money you need to pay is the same.
The second one is coinsurance. When you choose this option, the medical bill will be shared in percentage between you and the insurance company. For example, let’s say your coinsurance percentage is 30%. It means when $500 is written in the medical bill, you only need to pay $150 and the rest will be paid by the insurance company.
More Information about Deductible
Health insurance deductible is not the same with deductible in auto insurance or property insurance. In property or auto insurance, the insurance company will not pay for anything before the deductible point is reached.
Health insurance, on the contrary, is not that rigid and there is something that is called “Preventive Benefit.” Even when the deductible point has not been reached, the insurance company will still pay for preventive treatments such as shot or screening. But there are also some treatments that are not included in the deductible, for example the cost of medicines. So, you need to make sure that the treatment option you want is covered before sealing any deal.
So, have you understood what is a health insurance deductible and how it works? There is no clear rule regarding which one is the best, high deductible with low premium or low deductible with high premium. Everything will depend on what you need and can afford so make sure you choose wisely.