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Coverage Corner Answers: What is a Deductible?

booksTo help consumers better understand the complexities of purchasing health insurance, our new segment, Coverage Corner Answers, will address questions submitted to

For our first “Coverage Corner Answers ” post, we’ll answer one of the most common questions we receive: What is a deductible?

A deductible is the amount a consumer must pay out-of-pocket before health insurance coverage begins.  For medical services, a consumer will be required to pay a certain amount before the health insurance company will pick up the rest of the tab.

Most health insurance plans will cover routine health care services but require a small copayment at the time of receiving these services. It is always important to know what is covered in a policy, because many plans will cover basic physician visits and prescriptions drugs before a consumer meets their annual deductible. 

For example, let’s say a consumer has a plan with a $1,500 annual deductible. Their plan won’t pay for health care services until they spend $1,500 out-of-pocket.  But this particular plan doesn’t require the person to meet the deductible to get coverage for annual physicals and prescriptions drugs.

In health insurance speak, this is called “waiving the deductible. ” But not all plans waive the deductible for routine care. The most common example of a plan that does not is a traditional indemnity Fee-For-Service health plan. Also, high deductible PPO plans that are designed to cover catastrophic care may not waive the deductible for routine care.

Deductibles can only be a few hundred dollars or cost as much as a few thousand dollars, it is entirely dependent on the consumers’ needs and health insurance policy.

Young adults are usually advised to purchase coverage with higher deductibles which results in lower monthly premiums. A young adult can save money every month but will have to spend more once health care services are necessary.

Many experts advise consumers that have high deductible plans to open a Health Savings Account. This account will allow people to save money tax-free and pay for health care services-including deductibles. Lower deductibles will result in higher premiums every month but consumers will have to pay less out-of-pocket for health care services.  

Keep in mind that we all have different needs — and not every plan will work for you. So if you need more clarification on anything, visit our Health Insurance Information Center or call one of our agents at 1-888-250-3409.

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