Most health plans have an annual deductible, which is the amount you are responsible for paying before your insurance starts to cover you. If you're lucky, you'll have a very low deductible, or even none at all.
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In many ways, the deductible is what stands in between you and your full health insurance benefits. It's like the first hurdle you have to clear before your health plan starts to give back those premiums you paid. So, managing your deductible is key to understanding your plan and saving money.
If you're one of the many people who find it difficult to keep track of where they are on their deductible, you might try one of the new online services, like Simplee or Cake Health, which are designed to make this much easier.
How Much is Your Deductible?
You should know this before you ever enroll in a plan. If the plan has a low premium, there is a good chance the deductible will be high. You should ideally have the money to pay your deductible ready on hand or at least be saving for it. High Deductible Health Plans (HDHPs) often come with a Health Savings Account (HSAs), a tax free account where you can deposit money specifically to be used for medical costs. Aim to have saved in your Health Savings Account at least as much as the deductible. What counts as a HDHP? For 2011 and 2012, the deductible is at least $1,200 for individual plans or $2,400 for family.
The Date Your Deductible Rolls Over
This usually occurs every January, but some plans may use a different date. For example, health plans through schools or universities may use the academic year. This date is important because you may want to plan your appointments and procedures to occur after your deductible is met and before the year rolls over. Or, you may need to budget more money for the early part of the year.
Let's say you have a $1,000 deductible and you meet it in June. Any other services you get for the rest of the year will only cost you co-pays or coinsurance. But if you wait until January, you will have to pay $1,000 all over again. Scheduling bigger procedures before January could save you some cash if you are not planning other expensive services (that will again exceed $1,000) for the next year.
What Doesn't Count Towards Your Deductible?
Many health plans waive the deductible for services such as preventive care or the emergency room fee if you are admitted to the hospital. Check your policy so you know where you get a free pass, and take advantage of it.
Whether You Have Different Deductibles
Some plans have separate deductibles for in-network care versus out-of-network care. This could cost you more money unnecessarily if you've met one deductible and then see a doctor that counts towards the other. So, find out the rules and always check whether providers are in-network before you go (don't make assumptions; doctors in the same office may not all take the same insurance). If you have a family policy, check if there are separate or combined deductibles for each member that is covered. The rules can vary on this one, too.
How Often You Actually Meet Your Deductible
Odds are, if you purchased health insurance, you hope that it will pay for the health care you use. So, if you find that every year you come close to meeting your deductible but never do, you may be tempted to get a plan with a lower deductible so that you end up paying less out of pocket. Be aware, though: premiums for lower-deductible plans might be higher than you would end up saving. Make sure you consider the full cost spectrum of premiums, co-pays, coinsurance, and how much health care you expect to get that year when you weigh this decision.
The Bottom Line
To get full use out of your health insurance benefits, you need to be aware of your annual deductible. The lower the deductible the better. There are many useful online services to help you keep track of your deductible, and there are many factors that will contribute to how much your deductible will be.