It seems that of all the terms associated with heatlh coverage, the deductible should be the easiest to understand. Basically that’s the case but there are some topics worth discussing so you’re not surprised when the time comes that you’re faced with major significant medical expenses.
What IS a deductible?
The dedutible is the amount of exposure the policy owner (you!) are exposed to prior to the insurance company bellying up to the bar and contributing to paying qualified medical expenses. Typical exceptions are office visits covered by Copays and yearly preventive care which is covered at no charge by plans issued since the first phase of healthcare reform.
What is the deductible exposure for an entire family?
Well, it depends! Copay plans typically have multiple deductibles. For any individual, the insurance company starts contributing when the individual deductible is met. For a family, the maximum deductible exposure is typically 2 or 3 deductibles per family. One person can only contribute up to the individual deductible towards meeting the family deductible. Note if an individual meets his deductible but the family deductible has not been met, his deductible is considered “met” and the insurance company will start contributing towards their medical expenses.
Health savings accounts work in a variety of ways. The simplest and most common is a family deductible. With a family deductible, each family members medical expenses contribute to meetinsg a single integrated family deductible.
Another form of HSA deductible is “two deductibles per family”. For a family of two people this is the same as each person having their own individual deductible. For larger families you should check your coverage documents with care to understand how the contributions of all family members apply towards meeting the two deductibles.
The final form of a HSA deductible is per person. In this situation, each family member has their own deductible. This type of plan has the highest dollar exposure and is quite rare.
Under what conditions should I care about the deductible?
For plans with office visit copays, the deductible comes into plan for any costs outside a normal office visit. Typically this includes x-rays, lab work and any sophistacted tests such as MRI’s and CT scans. The cost of these medical tests and of course emergency room, ambulance and hospital bills are applied towards meeting the deductible.
HSA plans, with the exception of preventive coverage, provide no first dollar benefits. All costs, including generic and brand prescription drugs (assuming they are covered under the plan) contribute towards meeting the deductible.
What happens after the deductible is met?
With most plans, once the deductible is met, there is a period of coinsurance. A common coinsurance values is 80/20, where the insurance company pays 80 and your pay 20%. Although coinsurance is a topic for another day, I do want to make one point very clear. Coinsurance is for a fixed dollar amount, then the insurance company will cover eligible expenses 100%. To be specific, coinsurance does NOT go on forever!