What is a health insurance deductible?

January 15, 2016

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Lauren
Lead Copywriter

 

 

The deductible is the dollar amount you pay for medical costs before your carrier starts picking up the tab.

Here are a few examples to better explain:

Say you go all *Clark Griswold-in-Christmas-Vacation and chop down a twelve-foot Christmas tree for the house. When you unwrap this gargantuan tree in your living room, the branches explode out and one particularly nasty branch stabs you in the arm. It looks like you’re going to need a couple of stitches, so you head on over to the emergency room. The bill ends up costing you $1,000. Because your deductible is $3,000, you have to pay the $1,000 hospital bill. As Clark would say, “If this isn’t the biggest bag-over-the-head, punch-in-the-face I ever got!”

But say you have that $3,000 deductible plan and you go all Clark Griswold again and put a village’s worth of Christmas lights on your house. You fall off a ladder putting the lights on and end up breaking your leg AND arm. You go to the emergency room, receive treatment from a doctor, get some crutches and end up with a $7,000 bill. Because your deductible is $3,000, you pay the first $3,000 of the bill and then insurance pays the remaining $4,000- IF you don’t have a co-insurance amount.

What in Sam Hill is a co-insurance amount, you ask? It’s the amount you pay after you’ve reached your deductible and your carrier doesn’t cover the full cost of medical service. Co-insurance is typically 80/20 or 70/30 (you pay 20% or 30% of your medical bills; insurance covers the rest).

But wait! There is good news, Clark! Say you end up having a REALLY big hospital bill, like Cousin Eddie accidently ran you over with his RV. You have to stay in the hospital for a week to recover. This bill is going to be high, but fear not. Most insurance plans have an out-of-pocket max, which means at a certain cost point, insurance pays for everything. This is after you’ve reached your deductible and any amount that is subject to co-insurance. Your out-of-pocket max is the very most you’ll pay for your medical bills.

*We sincerely hope you’ve seen Christmas Vacation. It’s a goodie.