The Deductible

This is in regards to healthcare and health insurance.  There are similar systems in other areas of business – including auto and home insurances. 

The deductible is the amount of money the patient has to spend before their health insurance begins paying. 

It might be easier to do example.

Presume that you have a $2000 annual deductible and your policy begins January 1st.

The first $2000 that you spend will be your responsibility.

In January, you see your PCP and have an office visit that costs $100, you will pay $100.  There will still be $1900 to go on your deductible.

In February, you see your cardiologist. That visit costs $300, you will pay $300.  There will still be $1600 left to go on your deductible.

Unfortunately, in March you have to have an emergency gall bladder surgery which costs $5000.  The first $1600 is your responsibility because you have not met your deductible.  The remaining $3400 will be covered by your insurance because you have now spent $2000 healthcare dollars.

In April you return to your PCP for another office visit  that costs $100. This time it does not cost you anything because you have now met your deductible.

All other health dollars will be covered until the system resets at the beginning of the next year.

Considerations:

1. This is why similar visits to similar providers may cost you different amounts at different times.
2. The above example does not take copays into account.
3. Many insurance companies and employers fund Health Savings Accounts (HSA) to provide funds to help cover the deductibles.
4. Insurance plans with high deductibles are often cheaper than low deductible plans.  Healthy people – who are hopeful not to spend many health care dollars – often opt for cheaper high deductible plans. They presume they won’t spend up to the deductible.  Older, sicker people with known or planned health expenditures generally try to get the lowest deductible plans.