What is a high-deductible health insurance plan?

January 15, 2016

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A high-deductible health insurance plan means that you pay low monthly premiums in exchange for a high out-of-pocket expense for your medical bills. Once you reach your deductible, your insurance begins to cover your expenses.

In plain English:
If you have a high-deductible plan, your monthly premium bills are probably pretty low. But because you’re paying less monthly, you’re going to pay a lot if and when you need medical services.

What’s a deductible?

The deductible is the amount YOU have to pay for your medical bills until your insurance picks up the rest of the tab.

For example: Say your deductible is $6,850 (this is considered a high deductible). You decide that tightrope walking is an unrealized goal of yours and you join the circus. On your fifth tightrope attempt, you fall, but luckily an elephant breaks your fall (don’t worry, the elephant was not harmed). However, because the elephant is made of thousands of pounds of awesomeness, you break your back. You’re taken to the hospital where you spend several days undergoing tests and treatment. By the time you leave the hospital, your final bill is $45,000. Though you will not have to pay the entire $45,000, you WILL have to pay the deductible amount of $6,850 (unless you’ve paid for medical expense throughout the year that go toward your deductible; then you’d pay less) AND any co—insurance amounts. However, you will not exceed your out-of-pocket-max amount (the most you’ll pay for medical services in a year).

If you’re concerned with having a high deductible plan, look into low deductible plans. Just know that a low deductible plan typically costs more each month.