Deductible

What you should know about deductibles!

Unlike homeowners insurance, where you don't get anything until you pay your deductible, health plans must now provide some benefits, like health screenings and immunizations, before you meet the deductible.

With the passage of the Affordable Care Act, health insurance plans beginning on or after September 23, 2010 must provide coverage for a range of preventive health services without requiring any cost sharing, like a copay, coinsurance or deductible.

Many health insurance plans also cover things like doctor visits and prescription drugs before you meet your deductible, often with a copay. Bronze plans and HSA-eligible plans usually don't.

♦ The Affordable Care Act pushed insurance companies to cover more preventive services, which helps people avoid more serious health conditions.

Unfortunately, insurance companies then pushed deductibles through the roof.

They've also shifted expensive services like emergency room visits to the deductible, instead of requiring a copay like in the past.

Benefit Year

• The benefit year for individual plans bought inside or outside the Marketplace begins January 1 and ends December 31 of the same year.

• Employer plans don't always follow the calendar. Some run July to June or another 12-month cycle. Check your plan's start date.

The deductible is sometimes called the Calendar Year Deductible or Annual Deductible.

When you choose a health insurance plan, it's important to understand what your insurance company covers before you pay your deductible. Then you can decide whether you want a plan with a lower monthly premium and a higher deductible, or one with a higher monthly premium and a lower deductible.

♦ If your income is between 100% and 250% of the federal poverty level and you buy through the Marketplace, you may qualify for Cost-Sharing Reductions (CSR). CSR gives you a lower deductible, lower copays and a lower out-of-pocket maximum.

• It's possible to get the benefits of a Gold or Platinum plan for the price of a Silver plan. You can choose any category of plan, but the savings from CSR apply only if you enroll in a Silver plan.

♦ When shopping for insurance on the Marketplace, it's very important to have some understanding of Cost-Sharing Reductions. Take a little time to read how CSR works.

• New in 2026: all bronze and catastrophic plans on the Marketplace count as HSA-eligible. That means you can open a Health Savings Account and pay your deductible with tax-free money.

Deductible terms

In-network deductible

The deductible you must first pay when visiting a provider in your plan's network. It's almost always to your benefit to stay with in-network providers to reduce your out-of-pocket expenses.

Out-of-network deductible

Some plans, like PPO and POS plans, have out-of-network benefits. The out-of-network deductible is almost always much higher than the in-network deductible.

• If you must use an out-of-network provider, check with your plan, because out-of-network expenses may count toward your in-network totals.

• The trend has been away from counting out-of-network expenses toward the in-network deductible, to discourage the use of out-of-network providers as much as possible.

If your plan counts those expenses toward your in-network total, consider yourself very lucky.

Individual deductible

The amount each person is responsible for paying before their insurance begins to pay. The individual deductible allows each member of a family to receive benefits before the family deductible is met.

Family deductible

The total amount a family is responsible for paying. Once the family deductible is met, all family members can receive benefits, even if they haven't met their own individual deductibles.

Example

• For example, let's say a Silver PPO plan has an individual deductible of $3,800 and a family deductible of $7,600.

• Individual Deductible = $3,800 In-Network ($7,600 Out-of-Network)

• Family Deductible = $7,600 In-Network ($15,200 Out-of-Network)

Take a family of three using in-network providers. If one family member reaches $3,800 in medical expenses, that member's individual deductible is satisfied, and the plan starts to pay benefits for that person, even though the family deductible hasn't been met.

The other family members are eligible for benefits once the family's combined expenses meet the family deductible of $7,600. If a second family member has $3,800 in medical expenses, that satisfies the family's deductible, and the third member gets benefits right away.

♦ Not every family plan works this way. What we just described is called an embedded deductible.

Some plans, especially high-deductible plans paired with a health savings account (HSA), use a non-embedded deductible. With these, the plan doesn't pay for anyone until the entire family deductible is met. In our example, one family member could rack up $5,000 in bills and still get no help, because the family hasn't hit $7,600.

• Check your plan's Summary of Benefits and Coverage. If it doesn't say, call and ask: "Is my family deductible embedded?"

• One safety net: the out-of-pocket maximum is always embedded. No one person ever pays more than the individual out-of-pocket limit.

♦ Using an out-of-network provider gets more complicated. If the out-of-network doctor charges more than the plan's allowed amount, the doctor can bill you for the leftover difference (the balance). That extra balance billing money doesn't count toward your deductible.

• There are exceptions. For emergency care, and for out-of-network doctors at an in-network hospital, the No Surprises Act generally bans balance billing. See Surprise Billing.

Deductible carryover

Keep in mind that plans run on a yearly basis. When the new year starts, the plan resets and your responsibility starts all over.

There's an exception that some (not all) plans have.

♦ The exception is called deductible carryover.

Plans with this feature should say so in the plan's description of benefits. If they don't, you need to ask.

♦ Deductible carryover is a nice benefit.

If you get sick in the latter part of the year and don't satisfy your deductible until late in the year, a plan with a carryover feature will carry some or all of the deductible you met into the next year.

• Usually this is limited to the last three months of the plan year.

It's also tied to the plan you have, so if you change plans the next year, you'll lose this carryover.

This feature is becoming rare today, and it may be limited or unavailable in HSA-eligible plans. Ask your plan.

Prescription deductible

Many individual health plans cover the cost of prescription drugs without having to meet the plan's deductible first.

• The trend is toward a separate deductible for prescriptions.

Some plans have gone as far as to require a prescription deductible for all medicines, while others exclude generics and require the deductible only for brand-name drugs.

As drug costs rise, expect more plans to use deductibles to shift prescription costs to patients.