What is a Health Insurance Deductible and How Does it Affect Your Wallet?

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It seems as though health insurance has increased in complexity in the past 20 years, leaving many families with questions about their coverage and how the plan works. Do you need clarification about health care terminology? If you are confused by terms such as copayments, deductibles, cost-sharing, and more, then it is essential that you have an experienced insurance professional who can answer your questions.

Jonathan Nolan, JPN Insurance

These questions often arise when it is time to choose a new health insurance plan, or when someone needs to take advantage of the benefits that are offered.

Cost-Sharing and Deductibles

When you have medical expenses, most insurance plans are set up so that you will pay for a portion of the expenses and the insurance company will cover part of the expenses as well. This method is known as cost-sharing since the expenses are divided between the individual and the insurance company.

In many cases, insurance companies set up a deductible structure in advance. This deductible is the amount of money that you will need to pay before the health insurance company starts paying for expenses. Deductibles are typically annually-based.

For example, if you have a deductible of $1,500, then you will pay for your medical expenses until the threshold of $1,500 has been reached. At that point, the insurance company will begin sharing the medical costs with you for the rest of the year.

The Connection between Deductibles and Premiums

It is important to understand your deductible before choosing a new health insurance plan. If medical expenses arise, then you need to be prepared to pay for the expenses, up to the total of your deductible.

Often, you can manage the deductible based on the monthly premium that you will need to pay. If your family frequently needs medical care, then it might make sense to choose a plan with a lower deductible. Generally, the monthly premium price will go up when the deductible is decreased. On the other hand, some families find it beneficial to choose high-deductible plans if they don’t visit the doctor very often. They can reduce their monthly expenses and still have emergency coverage if needed.

Do you have additional questions about choosing the right health insurance coverage for your family? Contact JPN Insurance Services at (951) 443-9925