What is health insurance deductible?

Answer 1

Ok, there are 3 unique parts of all Health Insurance policies that have a direct affect on how much you the insured will have to pay before your insurance company will pay 100% of the rest of your medical bills for the rest of the calendar year. These three parts are as follows:
1.) Calendar year Health Plan Deductible
2.) Coinsurance
3.) Stop Loss Number
The first of 3 parts is almost always discussed. However, the last two are rarely discussed if ever. Let's address number 2 first.

Coinsurance is a percentage (typically 20%) of a defined number of medical bills - (known as the "stop loss number") that you agree to share with the insurance company before they will be obligated to pay 100%. Many consumers have seen the term "80/20" used at the time of policy purchase, but very few understand it. Even less have ever heard the term "stop loss number". Even though that term is the most important part of any Health Insurance policy. Without it, your out of pocket expense could be catastrophic (http://www.nowpublic.com/tech-biz/mega-life-health-health-markets-finally-get-what-they-deserve)

So let's clearly define it here and now and help others (as well as yourself) make informed decisions now and in the future. The vast majority of Health Insurance plans sold this year have an 80/20 of $10,000 "co-insurance" percentage split arrangement. This quite simply means that after you have satisfied your calendar year deductible, the insurance company will pay 80% ($8,000) and then you will pay 20% ($2,000) of the first $10,000 in medical bills that you incur throughout the course of each calendar year. This first $10,000 is known as the "stop loss number". After this brief sharing arrangement is over, the insurance company pays 100% up to $5 Million per insured for the rest of that calendar year. Everything starts over again on the first of each subsequent year.

Now, that's what happens if you stay "in the PPO network". What happens when you receive treatment OUTSIDE of the PPO network is an entirely different story. For example, often times you are receiving treatment in an "in-network" hospital but the anesthesiologist is "out of network" and you end up paying his entire bill. This being the case, it's good to know how "out of network" bills are paid. Typically, your risk doubles when you receive treatment from "out of network" providers. This means that your calendar year deductible doubles and your co-insurance percentage split doubles as well (or in some cases triples).
This being the case, it is equally important to determine what your "out of network" risk is as well. Also, we're not even discussing "reasonable and customary" charges...we'll leave that for another discussion.

Now pertaining to the calendar year health plan deductible. If you have a Traditional (non-HSA qualified) Health Insurance plan (and a good one) you should not ever have to pay your calendar year deductible for outpatient doctor office visits, outpatient prescription drugs (generic AND brand name), preventative care or wellness tests (including a routine physical). You should also not have to pay your calendar year deductible for accidental injuries.

With a good plan the aforementioned outpatient charges should be covered on a "first dollar" basis. Meaning that no deductible will be required and instead you will only pay a small "copay" (typically $25 or $30) at the time of service. This is all you will pay each time you see the doctor or need a prescription - EVEN THOUGH you have a $1,500 calendar year health plan deductible or more.

There are two kinds of claims with every quality "Traditional" Health Insurance plan. Claims that are "subject to deductible" (e.g. inpatient hospital admission, MRI, CT, Pet Scan, Nuclear Medicine Scan etc.) and claims that ARE NOT subject to deductible. These claims are commonly referred to as "first dollar" benefits. When your shopping for a "Traditional" Health Insurance plan, asking "what's covered on a "first dollar" basis and "what claims would be subject to deductible" should be two of the first questions you ask your agent. Well, besides "are you a licensed agent" and "what insurance company are you representing"? Oh and what is that insurance company's financial rating?
....and what is the Lifetime Maximum Health Insurance benefit for each of my family members"? and..."does the policy reduce coverage for Human Organ Transplants? and... is this is a cheesy "discount plan" or is this a legitimate Health Insurance plan?.... and.... lastly are you with Mega Life & Health or Midwest National Life endorsed by the NASE (National Association for the Self Employed). If the answer to the last questions is yes. Then none of the other questions matter and it is my very informed opinion that you should "RUN FOREST RUN". But anyway, I digress.

All of the aforementioned information is pertaining to "Traditional" Health Insurance plans. When it comes to "Consumer Driven Health Insurance Plans" such as HSA (Health Savings Account) qualified HDHP's (High Deductible Health Plans) it's a whole different ballgame and one you'll want to have front row tickets too! That is also a topic for another discussion some time in the future. Or, you can learn all about them now by clicking http://www.sbisvcs.com/hsa_qualified_hdhp.htm Hope that all helps. If not, you can learn much more about Health Insurance here: http://www.sbisvcs.com/healthinsuranceblog.htm