‘The Myth of the High Deductible’

If you’ve ever sat down and talked with friends about insurance, you’ve probably gotten into the deductible conversation. That’s when everyone goes around the table and starts comparing deductibles, trying to decide if theirs is too low or too high.

Fun dinner party talk, right?

For better and for worse, “deductible” is sort of a buzzword for health insurance.

To put it in terms of cars, it’s like someone telling you how much horsepower their new sports car has. Yes, that gives you a vague idea of what the vehicle can do, but it doesn’t tell you everything. There’s still a lot of information missing, which could help you decide if that same car would be right for you. How are the brakes? Is there a security system? What kind of storage space is there in the trunk?

In this article, we’re going to talk all things deductibles. We’ll dive into what this common health insurance term really means. Then, we’ll put it in perspective, and weigh the price of a deductible against the many other crucial factors that go into a health insurance policy.

“What is a Deductible?

In health insurance, your deductible is the amount you pay for covered medical services before your insurance provider will start to pay for care. This amount can vary anywhere from a few hundred dollars up to thousands of dollars, depending on your plan.

So, for instance, if your insurance plan has a $3,000 deductible, you’ll have to pay the first $3,000 for covered services yourself. After the deductible is reached, your insurance company will then step in, and begin to pay their share for covered medical services.

Generally, once you pay the amount of your deductible, you’re still going to be responsible for paying a copayment or coinsurance for services, with your insurance company paying the rest. In certain plans, you may eventually reach an out-of-pocket maximum cap; after this, your insurer generally pays for 100 percent of all covered services.

One thing to note: Before and after your deductible is reached, you’ll still be responsible for paying your premium every month.

High-Deductible Plans Vs. Low-Deductible Plans

There are high-deductible plans and low-deductible plans available to consumers, and both have their advantages and disadvantages.

To go back to our dinner party conversation: Different health insurance plans will have different deductibles, but there really isn’t any one deductible that’s better than another. It all comes down to your unique wants and needs, and evaluating the entire plan, not just the deductible.

It would be like saying a minivan is better or worse than a new sports car. They’re both vehicles, sure, but they meet different wants and needs for their owners. Each car will be a better fit for different types of drivers.

For example, if your biggest concern is going zero-to-sixty in a few seconds, then you’re probably more interested in horsepower than extra seating or power-lock doors. But if safety or storage are what you need most from a vehicle, then a top speed of 200 miles per hour most likely doesn’t matter as much to you.

Choosing a health insurance plan is a lot like purchasing a car in this way. There are a lot of different factors and considerations that need to be weighed. Finding the plan that works for you is a bit of a balancing act. Your deductible is just one part of a bigger whole, one that may also include:

  • Premiums
  • Out-of-pocket costs (such as copayments)
  • Keeping your preferred provider network
  • Accident or critical illness coverage
  • . . . and more

“How Do I Choose the Right Deductible?”

When talking about insurance, many people think of their deductible as sort of the “end-all-be-all,” “make-or-break” factor when deciding on a plan. But it doesn’t have to be this way. There are a lot of other parts of a plan to keep in mind.

Paying more for your deductible may mean saving costs elsewhere, or visa versa. One key place where this plays out is in your premium, or the amount you pay to maintain your health coverage.

As a rule of thumb, plans with higher deductibles tend to have lower premiums, and plans with lower deductibles usually have higher premiums. It’s a tradeoff, and it’s worth asking yourself:  “How much am I really willing to pay for a lower deductible?”

For instance? Say you’re weighing two (purely hypothetical) health insurance plans. One offers a $10,000 deductible with a $200 monthly premium. The other has a $5,000 deductible, with a $500 premium.

If you’re generally healthy, and only accrue, say, $500 in medical bills over a year, then that first plan will allow you to pay a total of $2,900 for the entire year. The second option, although it has a lower deductible, will end up costing you a lot more — $6,500 for the year.

It’s also worth noting that, in both cases, our fictional consumer never came close to reaching their deductible limit. That’s important to consider, as well. If you’re only going to be relying on your insurance for “day-to-day” treatments, in many cases, you won’t come close to your deductible, whether it’s $1,000 or $5,000. So, why pay more per month for coverage you won’t use?

But, what if you were to face an unexpected medical emergency and require an expensive procedure? With a high-deductible plan, wouldn’t you be responsible for paying a lot more out-of-pocket? In some cases, this may be true. But this just helps to show why it’s so important to research different plans, and so beneficial to get help customizing the option that will work best for you. Many different plans offer options that can help you fill in the gaps in your coverage, such as:

  • Covering the cost of preventative services, including physicals, before you reach your deductible
  • Offering separate deductibles for different services, such as prescription drug coverage
  • Providing coverage on accident or critical illness claims

“Can Anyone Help Me Get the Coverage I Need?”

Have any more questions about your deductible? Trying to weigh the pros and cons of different health insurance plans and not sure what to look for? Whatever your health insurance needs, the Enrollment Specialists would be happy to step in and help.

The ever-changing health insurance market can be confusing and not all health insurance plans are the same. At the Enrollment Specialists, we take care to understand the unique needs of each of our clients and get specific in our thinking – not cookie cutter. We use every tool at our disposal to make sure your medical costs are minimized and your coverage is at its peak, while providing you with expert advice and guidance.  

As our owner, principal consultant, and all-around health insurance superhero Matt Peebles says:

“We are committed to advising people in finding high quality insurance coverage that is affordable for you and your family. Our expert advisors are here to design and customize the right plan based upon your unique circumstances. We truly feel there is a plan for everyone.”

Ready to say, “I Got A Guy” for all things health and life insurance? Drop us a line today to get the conversation started.

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