A Basic Explanation

Even after you buy health insurance, you’ll still have to pay some medical bills. Surprised? Many people are — and this is why the deductible is such an important thing to consider when you’re choosing a health plan. Put simply, your plan’s deductible is the dollar amount you have to spend on your medical bills before your insurance company starts to help pay.

Expert Advice About Deductibles

As part of the Affordable Care Act (ACA), new health plans have to cover certain preventive care services like well-woman and well-child visits. Those are free. But for many services — like X-rays and lab tests — the deductible will most likely apply.

Here’s how it works: Let’s say your plan has a $1,000 deductible. You’ll be required to pay for some non-preventive in-network medical care out of your own pocket until you’ve spent $1,000, your deductible amount. After that, your insurance company starts to share your in-network costs.

Deductibles are set on an annual basis. This means that once your deductible has been met your insurer helps pay your covered in-network services for the rest of the year.

When you’re deciding on a health insurance plan, one of the most important decisions you’ll have to make is whether to choose a plan with a high deductible or a low one.

Here are a couple of things to consider:

  1. How much can you afford to pay in monthly premiums?A plan with a lower deductible generally costs more per month than one with a higher deductible. If you’re on a tight monthly budget and you don’t think you’ll be using a lot of medical services, a higher deductible plan might be right for you.
  2. How much medical care do you expect to need this year?If you anticipate needing a lot — for example, you’re pregnant, or have an upcoming surgery like a hip replacement with a lot of labs and X-rays, you may want your insurer to start paying as soon as possible — and to pay the largest possible share of your medical bills. In those cases, a plan with a lower deductible is your best bet.