Your health insurance deductible and monthly premiums are probably two of your biggest health care expenses. Even though your deductibles make up the largest share of your health care spending budget, it’s not always easy to understand what makes an impact on your health insurance deductible and what doesn’t.
This article will help you learn about health insurance deductibles and how to calculate your medical bills.
The design of each health plan determines how the health insurance deductible is calculated, and the design of a health plan can be very complex. Health plans sold by the same health insurance company will differ in how they count toward the deductible. Even the same plans can change from one year to the next.
You need to read the fine print and be savvy about the exact amount you need to pay, and when exactly you have to pay.
What counts towards the deductible
Depending on the structure of your health plan’s cost-sharing, funds will count toward your deductible. There are many ways to build cost sharing, but most fall into two main design categories.
Pay Now Plans, Pay Later Insurance
Your health insurance may only pay for preventive care on a dime until you hit your deductible for the year. You pay 100% of your medical bills before your deductible is reached.
After the deductible is reached, you simply pay coinsurance (or copays – copays – although less common in this type of plan design) up to the plan’s out-of-pocket maximum; you Your health insurance will cover the rest of this tab.
In these plans, generally any money you spend on medically necessary care counts toward your health insurance deductible, as long as it is a covered benefit of your health plan and you have complied with your health plan regarding referrals , prior authorization and use of rules within the network, if required, by the provider.
Although you pay 100% of your bill before reaching your deductible, that doesn’t mean you pay 100% of the hospital and healthcare provider bill for their service.
As long as you use a medical provider that is part of your insurance plan’s network, you only pay the amount your insurance company negotiated with the provider as part of its network agreement.
Although your health care provider may charge $200 for a visit, if your insurance company has a network agreement with your health care provider for a $120 visit, you will only pay $120, which is will be deemed to be 100% paid. Fees (health care providers must write off the other $80 as part of their network agreement with your insurance plan).
An HSA-eligible high-deductible health plan (HDHP) is an example of a plan that works this way. Except for certain preventive care, all costs are paid by the patient up to the deductible. After that, health plans start paying for care.
Plans for certain service deductibles
In this plan type, your health insurance selects some tabs for some non-preventive services even before you hit your deductible. Deductible services are usually services that require a co-payment. You only pay the co-payment for these services regardless of whether the deductible is met. Your health insurance pays for the remainder of the service.
For services that require coinsurance rather than a copayment, you pay the full cost of the service until your deductible is met (again, “full cost” refers to the amount negotiated by your insurance company with your medical provider, instead of the healthcare provider’s amount (provider bill). After the deductible is reached, you only pay the coinsurance amount; your health plan pays the rest.
Examples of such plans include what you might consider a “typical” health insurance plan that includes copays for outpatient visits and prescriptions, but applies deductibles for larger expenses like hospitalization or surgery.
In these plans, money you spend on services that have been deductible waived usually doesn’t count toward your deductible. For example, if you have a $35 copay to see a specialist, the $35 copay may not count toward your deductible, whether or not you meet the deductible.
However, this varies by health plan; therefore, read your benefit and coverage summary carefully and call your health plan if you are unsure.
Remember, due to the Affordable Care Act, some preventive care is 100% covered by all non-grandfather health plans. You do not pay any deductibles, co-pays, or coinsurance for covered preventive health care services you get from in-network providers.
Once you reach your out-of-pocket maximum for the year (including your deductible, coinsurance, and copays), your insurance company will pay 100% of your remaining medically necessary in-network expenses, provided you continue to comply Regarding prior authorization and referrals. (Note that this will work differently for inpatient care if you have Original Medicare).
What doesn’t count towards the deductible
There are several health care expenses that are not usually included in the deductible.
Benefits not covered
Out-of-pocket costs for health care services that are not covered by your health insurance benefits will not count towards your health insurance deductible.
For example, if your health insurance doesn’t cover cosmetic treatments for facial wrinkles, your out-of-pocket payments for those treatments won’t count toward your health insurance deductible.
Money you pay to out-of-network providers usually doesn’t count toward the deductible for health plans that don’t cover out-of-network care. There are exceptions to this rule, such as urgent care or when there is no provider in the network who can provide the required service.
Federal rules require insurers to include the cost of out-of-network emergency care in a patient’s regular in-network cost-sharing requirements (deductibles and out-of-pocket maximums) and prohibit insurers from enforcing higher cost-sharing for these services.
Beginning in 2022, the federal No Accidents Act prohibits out-of-network providers from sending balance bills to patients during an emergency or when the patient travels to an in-network facility but unknowingly receives out-of-network care providers during a visit .
Health plans that cover out-of-network care in other situations (usually PPO and POS plans) may differ in how they bill you for out-of-network care. You may have two different health insurance deductibles, one for in-network care and one for out-of-network care.
In this case, the money paid for out-of-network care will count toward the out-of-network deductible, but not the in-network deductible, unless it’s an emergency.
One caveat: If your out-of-network provider charges you more than the regular amount for services you receive, your health plan may limit the amount it charges to your out-of-network deductible to the regular amount.
This is done even if out-of-network providers are allowed to bill you for the remainder (since they don’t have a network agreement with your insurance company, they’re not obligated to write off any part of the bill). But as noted above, this is no longer permitted for urgent care or situations where a patient is being treated by an out-of-network provider at an in-network hospital.
Copayments are usually not included in the deductible. If your health plan sets a $20 copay for primary care office visits, the $20 you pay will most likely not count toward your deductible.
However, it will count towards your maximum out-of-pocket cost on almost all plans (some grandparents and grandfather plans may have different rules on how their maximum out-of-pocket limit works).
Monthly premiums do not count towards your deductible. In fact, the premium does not count towards any type of cost sharing. Premium is the cost of purchasing insurance.
They’re the price you pay your insurance company to cover some of the financial risk of potential health care costs. You must pay the monthly premium whether or not you need medical services that month.
A health insurance deductible is the amount you must spend on certain services before your health plan begins to pay for any of these services. The exact amount of the deductible varies from one plan to another. And the types of services for which the deductible applies will vary; some plans apply the deductible to almost all services, while others use copays to cover a broad range of services even before the deductible (for other services) is met .
Deductibles are an important factor to keep in mind when you compare health plans. But you also need to pay close attention to what services, if any, will be covered by the plan, rather than requiring you to pay for them through a deductible.
Some health plans have very low deductibles but fairly high out-of-pocket maximums, so you need to know how much coinsurance you might have to pay after your deductible is reached. Depending on the plan, you may find that a plan with a higher deductible is better if your total out-of-pocket costs are lower (especially if your monthly premium is also lower).