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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In the US, most people get their health insurance from their employer. Most employers pay a portion of the insurance premium. The employee pays the rest of he health insurance premium which is taken out of your paycheck.
The Medicare program is for persons 65 and older. It is complicated and many people purchase a commercial plan that supplements some of the things Medicare leaves out.
Women and children in extreme poverty are covered by the Medicaid program. It is difficult for men to get Medicaid unless they are permanently disabled.
Self-employed people are at a great disadvantage. They may not be insured at all due to purchasing 100% of their insurance. Obama passed the Affordable Care Act to help self-ensured people to buy insurance through health exchanges, but it became embroiled in political attacks.
If you get US health insurance, take a look at the policy because you may be:
Required to go to a “preferred” network of doctors and hospitals
Charged a co-payment for a simple medical visit or even more for an emergency room visit
Charged a fee for any prescriptions and you may need and you may need to go through a mail order pharmacy for meds for chronic conditions. I picked up 3 medications this morning at a pharmacy and my co-pay was $60
I pay a co-pay when I see a medical provider or physical therapist and then that is $30-50 per visit
It is all very complicated.
There is a “catastrophic” coverage that limits the amount I would pay per year to about $9000 per year if something really bad happened.
Lots of people don’t have any insurance at all but that is its own complex story.
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So a deductible is the amount you have to pay before insurance kicks in. It refreshes every year. Premium is how much you pay per month. Let’s say you have a deductible of 1000$. You go to the hospital for stitches. It costs 350$. That means you pay out of pocket all 350, because you haven’t hit your deductible yet. You have 650 left.
If then you go in for appendicitis and it costs another 5000, you pay 650 and that’s it. Now all things for the rest of the year are covered.
Some stuff you don’t need to pay for, Regardless of deductible, depending on insurance but that’s a lot more technical.
Jan 1 or whatever the date is, you got a new deductible of 1000$.
A copay is either a percentage or a flat rate. It basically says “for every trip to the hospital we pay for, you pay for 200$ of it too” or “you pay for 10% we pay for 90%” or some variation
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It varies from provider to provider, but IN GENERAL…
You pay either a monthly fee, or a little bit out of each paycheck.
There’s often a co-pay for service at the doctor, $15, $25, $100 are common.
Any remainder bill is sent to insurance.
A deductible, on any insurance, is how much you have to pay before the insurance pays ANYTHING.
Some insurance plans have a high deductible, some low. If yours is $2,500, that means you pay the first $2,500 of any bill before insurance pays anything.
If the bill is $1,800, you’re paying the whole thing. If it’s $2,530, then you pay $2,500 and insurance figures out what to do with the $30.
Some plans are 80%/20% meaning of the insured bill, they only ever pay 80% of it.
So with a $2,530 bill, a $2,500 deductible, and 80/20 insurance, you’re paying the first $2,500, and 20% of the remaining $30, so another $6.00.
On top of that, there’s an out of pocket maximum for the year, once you have spent that, your 80/20 plan converts to a 100% plan.
So take my story for example… I landed in the hospital for 7 days in January, 2019.
My annual out of pocket maximum was $6,500 and I hit that virtually instantly.
All the rest of my health care for 2019 was covered at 100%.
A deductible is the price of an all you can eat buffet. If you eat a ton of food, you did good. If you ate very little, you probably should have done a la carte.
You have to spend money so that you are not wasteful. Many people waste food at a buffet, so some buffets charge you extra for excess food that you dont eat (copay or coinsurance).
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