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DEDUCTIBLES
DEDUCTIBLE My clients would always ask me "how does the deductible work ... do I have to meet the deductible BEFORE I receive any benefits"? Everyone has heard of the term deductible, everyone has one in their Health Insurance Plan, but very few people understand them. The big confusion with deductibles come from co-pays (we will discuss co-pays later). The deductible is the amount owed by all of us before the insurance benefit "kicks in". There are components to the plan where the deductible does not apply, and where there is only co-pay for services. Examples of co-pays only are: physician visits, preventative care, medication, urgent care. Since plans vary from market to market these are just a few examples. The deductible applies toward every service outside the co-pays. Examples would be hospitalization, lab work, testing, x-rays and so on. Where the confusion comes in with co-pays and deductibles is what is covered by the co-pay? Example: You have a $30 co-pay to see the doctor, so you think everything is covered when you see the doctor and you are shocked when you get a bill for $345 after your appointment. You call your agent or insurance company they say the co-pay only covers the doctor visit or the 5 minutes (if you’re lucky) that you actually sit with the doctor. Any test, x-rays, or lab work your doctor ordered during the visit goes toward your deductible. The co-pay only covered the actual doctor visit and nothing else. Now some plans will cover test, x-rays, and lab work if performed at the time of appointment at the doctor’s office under the co-pay. That is why it is so important for you to understand how this works, so if you want all that covered under your doctor visit co-pay that you get a policy that covers it. Granted you will pay for it in higher premiums, but you can get it.
Under most plans the co-pay to see the doctor covers only seeing the doctor. So, if you see the doctor and he tells you it’s just a virus (which is about 90% of the time) and sends you home you would only pay the co-pay to see the doctor. Preventive care is another area where people get surprised by the co-pay versus deductible. Most plans will have co-pays for items such as annual physicals, mammograms, pap-smears, and so on. You have to really understand your policy in this area just as in the doctor visit co-pay situation, because the co-pay may only cover the doctor visit and not the mammogram. The mammogram is considered an x-ray and would go toward your deductible unless it states it is covered in the co-pay. Another common thing you will see is a co-pay to see the doctor and the deductible is waived for the mammogram, and you are responsible for paying the co-insurance amount on the mammogram. So, if your co-insurance is 20% you will pay 20% of the cost of the mammogram and the amount you pay will go against your maximum out of pocket limit for co-insurance.
Basically everything will go against your deductible unless your policy states the deductible is waived for a certain procedure, test, lab work, or x-ray and then it might state you’re responsible for the co-insurance, or if the co-pay actually states the procedure, test, lab work, or x-ray is covered under the co-pay. If the co-pay doesn’t state it is covered and the policy doesn’t state deductible is waived it is going against the deductible, which means it is coming out of your pocket. This is why it is so important to ask the right questions when talking to your agent before buying a Health Insurance Plan or you will end up with a lot of expenses you weren’t counting on.
When it comes to your health insurance the higher the deductible the lower the monthly premium, and the lower the deductible the higher the monthly premium will be. If you’re a person who is really healthy, who never goes to the doctor, or hasn’t been in the hospital in the last 5 years you don’t want to buy a low deductible plan. You will pay 50 – 60% more for the low deductible that you will never use just to hedge against the . . . what if? I would have clients I could put into a $2,500 deductible for $125 a month and they would say no I want the $1,000 deductible policy at $240 a month. I would tell them let’s look at the math to see if this makes sense. Take $240 (1,000 deductible payment) - $125 (2,500 deductible payment) = $120 (savings in the payment) x 12 = $1,440 (the extra annual premium on the 1,000 deductible). I would then ask why you would pay an extra $1,440 a year to save $60 on your deductible. If you don’t use your deductible that year, because you are healthy then you over paid for your insurance by $1,440 to save a possible $60 dollars. This is a real life example and I ran into this every day. The insurance company has conditioned everyone to go with the lower deductible and for obvious reasons when they can make an additional $1,440 on one policy. Everyone’s situation is different and that is why you need a really good Independent Insurance Broker who will show you all the different plans and break down the numbers for you.
