Understanding how deductibles work is essential for managing your health insurance well:
Meeting the deductible: At the start of each year, you will pay out of pocket for covered health care services until you've spent an amount equal to your deductible.
After meeting the deductible: Once you've met your deductible, your insurance plan begins covering some of your medical costs. You're usually still responsible for a portion of your health care expenses through coinsurance or copayments:
- Coinsurance: This is a percentage of the costs you continue to pay after meeting your deductible. For example, if your coinsurance is 20%, you pay 20% of the costs, and your insurance covers the remaining 80%.
- Copayments: These are fixed amounts you pay for specific services after meeting your deductible. For example, you may have to pay a copay of $30 for primary care doctor visits. Your insurance covers the remainder of the cost. Copayments do not count toward your deductible.
Annual reset: Your deductible amount resets every year. This means you'll need to meet your deductible amount again before your insurance starts to pay its share of your health care costs for the new plan year. Every health insurance plan has a different plan year that doesn't always follow the calendar year, so it's important to understand your individual plan to best manage your health expenses.