Making the right choice in a health insurance plan requires understanding how it works. Health insurance in the United States can be complex and confusing. One of the most complex concepts in our current system is the deductible.

Let’s take a closer look at the deductible: what it is, how it works, and how it affects the costs of your health insurance plan.

The health insurance deductible

Like with automobile or homeowner’s insurance, the health insurance deductible is the amount of money you will have to pay out of your own pocket for health care services before your insurance company begins to pay.

Most health care plans include some level of deductible. Generally speaking, the lower your monthly health insurance premiums, the higher your deductible will be.

The most common health insurance plans available on the federal government’s health insurance marketplace (under the Affordable Care Act or “Obamacare), the silver plans, cover 70 percent of health expenses after the deductible.

The average deductible for silver plans rose to $3,937 in 2018. Bronze plans, which are the second-most popular, the average deductible on the marketplace declined to $5,873.

For 2019, the deductible cannot be higher than $7,900 for individual plans or $15,800 for family plans (before marketplace subsidies).

Copayments and coinsurance

Once you’ve paid your deductible for the year, you then pay a portion of the allowed cost for each covered health service, and the insurance company pays the rest. The amount over your deductible that you pay is called a copayment or coinsurance, depending on the health insurance plan you have. Many plans have a cap on the total amount you will pay in a year, often called a maximum out-of-pocket limit.

copayment is a fixed amount that you pay for each covered medical service under your plan, such as 20%. Say a visit to your doctor’s office or local clinic has an allowable cost (the listed fee that your insurance plan will pay) of $100. After you’ve reached your deductible for the year, you will pay $20 for that visit, and the insurance company will pay the health care provider $80.

Major medical procedures

The impact of deductibles, copayments and coinsurance is more obvious for a major medical procedure — for example, one that involves overnight stays in a hospital.

For example, if the allowable cost is $12,000 (not uncommon), your deductible is $3,000, you have not had any medical services yet this year, and your coinsurance is 20%: you will pay $4,800.

  • total cost: $12,000
  • deductible: $3,000 deductible
  • coinsurance: 20% x (12,000-3,000) = $1,800.

Beyond the deductible

Under the Affordable Care Act, all Marketplace health insurance plans pay for the full costs of listed preventative services, with no deductible, copayment or coinsurance, such as:

  • vaccinations
  • aspirin to prevent cardiovascular disease and colorectal cancer for adults with high cardiovascular risk from 50 to 59 years
  • Screening tests for blood pressure, depression, colorectal cancer, Hepatitis B, C, HIV etc., as well as some for specific groups:
    • for women: anemia, consultation for certain approved contraception methods, folic acid, gestational diabetes, breast cancer mammography every one or two years for women over 40, breast cancer genetic test for women at higher risk, cervical cancer screening, Pap test, HPV DNA test, preeclampsia prevention, and more
    • for children: autism screening, alcohol, tobacco and drug use assessments for adolescents, behavioral assessments, blood pressure screening, blood screening for newborns, depression and developmental screening, hearing screening and more

You can find the full list of covered services at HealthCare.gov.

Get straight answers at Health Choice One

Choosing the right health insurance plan for you and your family means figuring out the right combination of monthly premiums, deductibles, covered services, allowable costs, copayments and coinsurance.

You can talk to us at Health Choice One to get the information you need to make the right choice.