8 Things You Should Know About Deductibles

Health plans can seem complicated. It helps to know what questions to ask and where to find the information you need.
Take deductibles, for example. They’re important to your pocketbook, but do you know how they work? To get you started, here are answers to some common questions we get from our members.

Q: What is a deductible?
A: A deductible is the amount you pay for health care services each year before your health plan starts to pay. For example, if you have a $1,500 deductible, you pay the first $1,500 of the services you need.

Depending on your plan, you may also need to meet this in-network deductible before you pay for covered prescription drugs. This means you will pay the prescription’s full cost upfront until the deductible is met. Then you will pay your copay or coinsurance amount until you meet your yearly out-of-pocket maximum. But some plans do not have a deductible. And some types of medicines may be available at a lower cost (as little as $0), even if the deductible has not been met first.

Q: What happens after I meet the deductible?
A: Once you’ve met your deductible, you usually pay only a copay and/or coinsurance for covered services. Coinsurance is when your plan pays a large percentage of the cost of care and you pay the rest. For example, if your coinsurance is 80/20, you’ll only pay 20 percent of the costs when you need care. Your health plan pays the rest.

Q: You said a deductible is the amount you pay each year. Does the deductible reset each year?
A: Yes. Since your deductible resets each plan year, it’s a good idea to keep an eye on the figures. If you’ve met your deductible for the year or are close to meeting it, you may want to squeeze in some other tests or procedures before your plan year ends to lower your out-of-pocket costs.

Q: Is a health insurance deductible different from other types of deductibles?
A: Unlike auto, renters or homeowner insurance where you don’t get services until you pay your deductible, many health plans cover the cost of some benefits before you meet the deductible. For example, your plan may cover the cost of annual physicals and many preventive health screenings before the deductible is met.

Q: My plan information says I have a family deductible, too. What does that mean?
A: If your plan covers your family, there will probably be a deductible for each person and a separate family deductible. As soon as the family deductible is met, your plan starts paying at the coinsurance amount for everyone’s care. That’s the case even if some family members haven’t met their individual deductible.

Here’s a good example of how this works:
Your family gets in a car accident. You all need to get checked at the hospital for injuries. If each person had to meet an individual deductible, you would pay all the deductible amounts before your coinsurance started paying.

With a family deductible, once you met that one family deductible amount, no other individual deductibles are needed. After the family deductible is met, you’ll only pay your copay and/or coinsurance amount for services for each family member.

Some plans, like a health spending account (HSA) may only have a family deductible, so your member ID card will only list one deductible. Check your benefit details if you aren’t sure.

Q: Do all health care services apply to my deductible until it’s met?
A: Not always. Some plans fully cover preventive services, which means you don’t pay anything at the time you get them. Because you don’t have an out-of-pocket charge, those services won’t count toward meeting your deductible.

If you receive care that isn’t covered by your health plan, it often won’t count toward your deductible. This might include such things as cosmetic procedures or seeing a provider who isn’t in your health plan’s network.

Q: What are the pros and cons of a high or low deductible?
A: In most cases, the higher a plan’s deductible, the lower the monthly premium. If you’re willing to pay more when you need care, you can choose a higher deductible to reduce the amount you pay each month.

The lower a plan’s deductible, the higher the premium. You’ll pay more each month, but your plan will start sharing the costs sooner because you’ll reach your deductible faster.

Some people who don’t often need medical care would rather have a smaller premium and pay more up front for care as they go. But it can mean taking a chance that you might end up paying a big medical bill if you have an unexpected illness or injury.

Other people like knowing that when they need their insurance, they won’t have to come up with a large sum of money before their plan starts helping with the cost. They’d rather have a higher premium, but a lower deductible. It makes costs more predictable.

Q: If I pay so much out of pocket before my insurance kicks in, why should I have coverage?
A: Health coverage can lower your costs even when you must pay out of pocket to meet your deductible. Insurance companies negotiate their rates with providers, and you’ll pay that discounted rate. Without that discount, people often pay twice as much — or more — for care.

For details about your deductible, log in to Blue Access for Members^SM (BAM^SM). You’ll see your deductible amount in the Coverage section. You can see how much of your deductible you’ve met to date in the Spending section.

To find more information about insurance terms, check out the BCBSTX online glossary.

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