Deductible

What you should know about deductibles!

Unlike homeowners insurance, where you don’t get services until you pay your deductible, many health plans now must provide some benefits like health screens 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 copay, coinsurance and deductible.

Most health insurance plans also cover things like doctor visits and prescription drugs even if you haven’t met your deductible.

♦ 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 have also shifted expensive services like an emergency room visit to the deductible instead of requiring a copay like in the past.

Benefit Year

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

The deductible is sometimes referred to as Calendar Year Deductible or Annual Deductible.

When you choose a health insurance plan, it’s important to understand what your insurance company covers without requiring you to pay your deductible. Then you can decide whether you want a plan with lower monthly premiums and a higher deductible, or one with a higher monthly premium and a lower deductible.

♦ If you apply for insurance through the Marketplace you may qualify for Cost-Sharing Reductions (CSR). CSR can save you a lot of money by giving you a plan with a lower premium, lower copay and lower deductible.

• It is 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 savings from CSR applies only if you enroll in a Silver plan.

♦ When shopping for insurance at the Marketplace it is very important that you have some understanding of Cost-Sharing Reductions (CSR). Be sure to take a little time to read how CSR works.

Deductible terms

In-network deductible

The deductible amount you must first pay when visiting a provider that is in your plan’s network. It is 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 deductible for out-of-network is almost always much higher than the deductible for in-network providers.

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

• The trend has been away from inclusion of out-of-network expenses in the in-network deductible total so as to discourage the use of out-of-network providers as much as possible.

If your plan includes those expenses in 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 will be able to receive benefits, even if they have not met their own individual deductibles.

Example

• Using Humana’s Silver 3800/National POS plan as an example.

• 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 would be satisfied and the plan would start to pay benefits for that person, even though the family deductible has not been met.

Other members of the family are eligible to receive benefits once the entire family's combined expenses meet the family deductible of $7,600. If the second family member incurred $3,800 in medical expense that would satisfy the family’s deductible and the third member would receive benefits right away.

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 is an exception that some (not all) plans have.

♦ The exception is called deductible carryover.

Plans with this except should state this in the plan’s description of benefits. If they do not, then you need to ask.

♦ Deductible carryover is a nice benefit.

Should you get sick in the latter part of the year and not satisfy your deductible until late in the year a plan with a carryover feature will carry to the next year some or all of the deductible that you met.

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

It is also tied to the plan you have so if you change plans the next year you will lose this carryover.

Prescription deductible

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

• The trend is to have a separate deductible for prescriptions.

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

As the cost of drugs increase, we can expect the trend to use deductibles to shift more prescription costs to the patient to increase.