What does a deductible mean and why do you still have to spend money when you go to a doctor if you pay for insurance every month?
What are the other fancy words I need to know?
How do you know if something is a good deal?
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Before the deductible, with a few exceptions such as an annual wellness visit on many plans, everything is your responsibility to pay at the rates insurance sets.
After the deductible, you’re usually responsible for some fraction of the costs (at insurance set prices) until you reach the out of pocket maximum.
After the out of pocket maximum, everything covered by insurance is paid entirely by insurance. (Up to a annual benefit limit, if the plan has one)
First, your company (i.e. your employer) chooses your health care plan, which means you don’t get to choose your doctors. That’s really weird because they can change it on a whim. My wife had a OBGYN that was with her through the birth of a couple of kids, and poof, gonzo, we got switched to a different plan.
If you lose your job, for whatever reason, you lose your health care. You will be unemployed and have to come up with about $2k/month in COBRA payments.
So, my company pays a bit over $2k per month in premiums for my family (4 people). We have a high deductible. That means that whatever medical service I get, I pay for it completely out of pocket, insurance doesn’t pay anything. My deductible is $6,000. And this resets every year, and that is the real stinger. You can get double whammies because you will pay 6k, then the plan year resets, so you have to pay 6k again.
The purpose of a deductible is to discourage people from seeking medical care. It puts an up front cost on seeing a doctor. It is basically like you still are paying more premium for the insurance.
When you hit that deductible limit (6k) then insurance kicks in and will cover 80% of the cost, I pay the other 20%. Something like an ER visit can cost 10k or 20k, so you have to pay 20% of that.
Some things are just not covered by your insurance, so they don’t pay for those things at all, you pay for the entire thing. My kid got a blood test once, and insurance refused to cover any of it.
> How do you know if something is a good deal?
There is no such thing. When seeking medical care, you are not shopping around, you are not comparing prices, you are not looking for a coupon, or a sale. You go to your care providers, and they charge you whatever the fuck they want to charge you, and you pay it.
Bonus story: if I sound a bit pissed off it is because I am, I just received the bill for an ER visit a few weeks ago. Total billed is $18,000, insurance covered $12,000, and I have to pay out of my pocket nearly $6,000. Fuck. Note to self, next time, just fucking die. It would be way more affordable to just fucking die. My family would be better off.
A deductible isn’t specific to Healy insurance, but exists in various types of insurance. It’s an amount that you need to spend before the insurance kicks in.
You need to still pay the doctor in many instances because that is how the insurance contract is written. Generally, the aim of small copays like that is to help prevent people from getting services they really don’t need.
It works similar to just about any other insurance plan: you pay the insurance company a monthly fee, and in exchange they cover some or all of your medical costs when you need them. Here are definitions for some of the terms you may have stumbled upon:
* **Premium:** The monthly fee you pay to the insurance company.
* **Deductible:** The amount you have to pay for a good or service before your insurance kicks in.
* **Copayment:** Also abbreviated as copay, this is the flat rate you pay for a good or service that’s covered by your insurance.
* **Coinsurance:** This is when you still have to pay some of the costs above the deductible, usually a percentage value.
* **Out-of-pocket maximum:** If your combined payment for deductibles, copay, and coinsurance goes above this amount within a year, everything above that is paid by your insurance company.
Let’s go with an example to illustrate how these all pay out. You have an insurance plan with a $2,000 deductible, 20% coinsurance, $100 copay for a doctor’s visit, and an out-of-pocket maximum for $4000. You get into an accident that requires surgery; the hospital bills your insurance company for $10,000. This means you’ve gotta pay $2,000 to cover your deductible. Of the remaining $8,000, also you have to pay 20%, or $1,600, as coinsurance. You have five followup appointments with the doctor to see how you’re recovering. However, the fifth appointment doesn’t require a copay, because it’s above your out-of-pocket maximum.
Now, there are plans out there that have lower deductibles, copays, coinsurance, and/or out-of-pocket maximums, but those usually have the tradeoff of charging a higher monthly premium. Some insurers also have special deals with medical providers where they get better rates; they sell plans where you have cheaper premiums, but you can only use it with those affiliated doctors and hospitals.
Most insurance is provided by one’s company, usually with a discounted premium. The US government also has several insurance programs: Medicare for the elderly, Medicaid for those below the poverty line.
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this is tough. you might have been offered a high deductible plan and a copay plan.
The other key words are “coinsurance” and “maximum annual out of pocket expense”.
If care is deemed covered by your insurer, after you reach your “deductible”, you are going to pay a percentage of the cost up to “maximum out of pocket”. That percentage is coinsurance.
I am going to assume others have described the deductible and copay.
What you need to do is compare your cost for four scenarios:
– what is your cost if you receive only preventative care, below the value of your deductible.
– what is your cost if you receive care exactly equal to your deductible
– what is your cost if … between the deductible and maximum out of pocket
– …. if your expenses reach the maximum out of pocket (you have a major health crisis)
This is complicated, you are going to have to spend some time evaluating. *good* high deductible plans have a lower cost across the board, for all four scenarios. If that’s not the case, you haven’t been offered a good high deductible plan.
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