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What is a Health Insurance Deductible and How Does It Work?

When you purchase a primary health insurance plan, a variety of factors define how your plan functions, such as the deductible. Health insurance deductibles can be high or low, so it’s important to find a plan that meets your needs.

Once you decide on a health insurance plan, there are ways to help cover costs before the health insurance deductible is reached. At Aflac, we offer supplemental insurance that works with your primary plan to create more holistic coverage (there may be waiting periods before benefits can be used). Essentially, what your primary health insurance misses, we help cover.

Read on to learn how health insurance deductibles work and how they compare to other types of insurance costs.

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How does a deductible work?

A health insurance deductible is a specific amount of money that must be paid out-of-pocket before any health insurance benefits kick in.1 Usually, the prices of the health insurance plan and the deductible amount are directly related. The more you spend on monthly payments (premiums) for the health insurance plan, the lower the deductible, and vice versa.1

Here’s an example of how an insurance deductible works:

Say you injured your arm and visit the doctor to get some x-rays and a treatment plan. You have a health insurance plan with a $1,000 deductible. The costs of the x-rays, a cast, and bloodwork end up closer to $3,000.1  In this scenario, you would have to pay the entire $1,000 deductible out of pocket, and then your health insurance would help cover the remaining $2,000 in medical expenses.

Low vs. high deductible health plans

In some health insurance plans, different types of treatment will have separate deductibles. For example, your health insurance plan may offer one deductible for prescription drugs and another for general healthcare expenses.1 You may have a high deductible for one and a low deductible for the other.

For some treatments and procedures, you may not need to meet the health insurance deductible and are fully covered by your health insurance plan, like most preventative care.1 This depends on the specific company and plan you choose. Also, a health insurance plan with a high deductible may be referred to as a high-deductible plan, while one with a low deductible may be called a low-deductible plan.

Let’s look at a few cost examples related to health insurance deductibles:

  • Anything over $1,400 is considered a high deductible,2 but this number can stretch up to $7,000.2 A deductible around $500 or $1,000 would be more likely to classify as a low deductible.
  • The average annual health insurance deductible for an individual is $2,424 out-of-pocket before your insurance coverage kicks in.1
  • On average, those covered by health insurance ended up paying $1,500 toward their deductible annually.3

Health insurance deductibles vs. other insurance costs

Now that you know how deductibles work, let’s review a handful of other health insurance terms that may be helpful to understand when choosing a plan:

  • Premiums: Premiums are the monthly payments made to keep your health insurance plan active.1
  • Coinsurance: Coinsurance is the percentage of payments that you agree to pay. For example, your insurance company may decide to pay for 60% of a certain procedure, and then you are required to pay the remaining 40%.1
  • Copay: The copay is the specific dollar amount you agree to pay for certain medical services. Copays are similar to coinsurance, but the value is set in stone instead of a percentage.1 Copays don’t typically count toward your deductible.1
  • Out-of-pocket Maximum: The out-of-pocket maximum is the total amount of money you must pay before your plan pays for 100% of care. This value is the sum of combined deductibles, copay, coinsurance, and premiums.1

Choose an Aflac Supplemental Insurance Plan

It’s important to know how health insurance deductibles work so you may have a better idea of the kind of support you need. Whether your deductible is in the hundreds or thousands, Aflac offers a variety of supplemental plans that can help you pay down your deductible. Our insurance plans also help assist with other out-of-pocket costs you encounter along your healthcare journey.

We offer supplemental support in specific areas like cancer, critical illness, accident, short-term disability, and vision. Chatting with an agent and getting a quote can help clarify ways you can bring high insurance costs down.

Still have questions?

Explore your supplemental health insurance options.

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