Health insurance companies use a lot of complicated terms when describing their offerings and plan benefits. This can make it difficult for a first-time policy buyer to understand how health insurance policies work. Ideally, to make an informed buying decision, it is important for you to know what the jargon and terms used by health insurance companies mean. So, in this article, we explain what exactly a health insurance deductible is and how it works.
What Is a Health Insurance Deductible?
A health insurance deductible is a certain amount of money that you’ll need to pay first, after which your insurance policy will pay for your medical costs. For instance, if you have a $500 deductible and your bill amounts to $5,000, you’ll need to pay $500, and your insurance provider will cover the remaining expenses. Based on how frequently you visit your healthcare provider or how much your bills come up to, it could take just one visit or several months for you to reach your deductible.
Low- vs. High-Deductible Health Insurance Plans
High-deductible plans usually have a low premium and vice versa. In recent years, high-deductible insurance plans have become very popular among policy buyers since the cost of the policy is a lot lower. Your out-of-pocket expenses, however, will likely be a lot higher with a high-deductible plan when you visit a healthcare provider. In comparison, an individual with a low-deductible plan will have a higher monthly premium but will not have to spend as much when they visit a healthcare provider.
High-deductible plans work well for individuals who are generally healthy and don’t anticipate visits to healthcare providers. Low-deductible plans, on the other hand, are a great choice for people who are diagnosed with chronic medical conditions and need to visit their healthcare provider several times a year.
What Is the Right Deductible for You?
The answer to this question depends on things like how many visits to healthcare providers you anticipate in a year, whether you have the savings to pay for upfront medical expenses, and how many people you are insuring in total. While a high-deductible plan can help you save money on a monthly basis, a low-deductible plan will help you manage your out-of-pocket expenses a whole lot better. So, take these factors into account and make your choice accordingly.
