How do deductibles in health insurance work?
I have considered purchasing private insurance. My school insurance doesn’t cover the stuff I need it to.
I was looking at humana’s plans. I came across one that was $87 a month but it had a $2500 deductible. If I were to get injured and have a hospital bill of like $4000, would it pay anything if I hadn’t met that deductible yet?
Thanks.
Tags: deductibles, Health, Health Insurance, Insurance, Work
All deductibles are the same – you pay the first 2500 worth of costs of any accident or covered illness or occurrence per year.
In such a scenario, Humana would pay $1500 and you would pay $2500. At that point your deductible for the year would be fully met. Humana would handle future claims for that year with no deductible.
You would have to pay the first $2500 (minus any portion of the deductible that you had already met). The plan would pay some (typically 80%) of the remaining $1500.
Imagine you have a $100,000 heart surgery, which is a covered medical expense under your health insurance plan, and let’s say this health insurance plan has a $1,000 annual… Typically, a deductible is the amount of money you must pay each year before your health insurance plan starts to pay for covered medical expenses… So for us it is more useful….
Dustin – All of the answers thus far are essentially correct: your health insurance deductible works the same way as your car insurance deductible – you have to pay that amount before the insurance starts paying. So, in your example, you have an annual deductible of $2,500 after which Humana will start paying 80% of what’s left and you’ll “co-insure” the other 20% (you’ll stop paying the 20% when you’ve paid an extra $2,000). Therefore, you have an out of pocket maximum exposure (at least in theory) of $4,500/year. Now, if you have “only” $5,000 or $10,000 in medical care charges, that’s not a particularly good deal, is it? On the other hand, remember the primary reason to have any insurance: NOT for routine, ordinary, or even “low-level” expenses but, instead, for big-time, costly, catastrophes, like that $87,000 hospital/surgical claim, etc.
Consider these things before buying:
1. How “much” health care do you generally use? For most folks, especially guys, the answer usually is “not much.” Therefore, why pay more to have a lower deductible plan? Even if you buy a plan with a $5,000 deductible (look at the Humana “Autograph” plan), you’ll still get the benefits you’re most likely to use included ($40 MD copay/visit and $15 copay for generic drugs).
2. If you’ve not done so, find a broker to help. Go to NAHU.org to find one near you (NAHU is the professional association for brokers like me who specialize in health insurance).
3. Go online to run some more plans & prices to be sure you have the most cost-effective plan for your needs. Visit my site (see below) or use an online quoting site like Norvax (see below).
4. Finally, stick with the “brand name” companies, like Humana, Blue Cross, Aetna, etc. There are a lot of other companies around who will “look good” but who will be really hard to deal with in the even you do have a really large claim. This is too important to mess around with; stick with the “big boys.”
Hope this helps a bit!