A Fixed Amount
A deductible is the fixed amount of medical costs the customer agrees to pay before the insurance company will begin to pay expenses. For example, if you went to the emergency room for treatment of a broken arm, there would be a bill for services rendered. You or the hospital would submit that bill to the insurance company. This is also known as submitting a claim. The insurance company reviews the claim, noting the services included in your contract. The cost of the services included in your contract below the deductible amount is your responsibility. The insurance company would then begin to pay for covered services beyond that amount.
Annual Reset
The amount of the deductible varies among policies and insurance companies and resets on a set date, usually Jan. 1, every year. These choices lower the cost of medical insurance for the customer. If the insured has a relatively healthy year, the savings are considerable. However, if the insured receives medical care, fulfilling the deductible offsets the savings from reduced premiums. Many choose to deposit money into a health savings account to help with health care expenses.
Preventative Healthcare
Having a high deductible may cause people to defer routine preventative care such as annual physicals and screening to a later date. It is for this reason some insurance policies will consider preventative health care services separate from the deductible. The insurance company hopes to reduce long-term health care costs through well care and early detection.
One and All
The way the deductible is calculated also varies from plan to plan. There are individual deductibles and family deductibles. The individual deductible applies only to one person or one member of the family if there is more than one person insured. The family deductible usually applies to all the covered members and is considerably higher than the individual deductible--often double. However, the family deductible usually allows the out-of-pocket expenses of several family members to count toward the total limit.
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