Three of the most common health insurance costs are the premium, the co-payment and the deductible. Your premium is the price you pay your insurer for providing your health plan. Your co-payment is a small cost that you contribute to your physician at the time of care.
The third common cost is the deductible, and it is often one of the more confusing coverage costs to understand.
What is the Deductible?
Health insurance policies will cover most of the costs associated with your health care. However, most insurers expect their policyholders to contribute a relatively small amount of their own money towards the cost of care. Think of your deductible as your responsibility for health services over the life of your policy.
Most health insurance policies last around one year. During that period, your health insurer will set a specific monetary figure that you have to pay. That is your deductible. You have to pay off the deductible over the course of your policy.
Paying Your Deductible
Let’s say your policy comes with a $5,000 deductible. That means you are responsible for contributing $5,000 over the course of the policy towards your health care needs.
Once you have paid the $5,000 off, your insurance policy will cover 100 percent of your medical needs from that point forward. You contribute to your deductible by seeing undergoing various forms of medical treatment. These may include diagnostic testing, surgery or physical therapy.
You might worry that you can’t afford certain treatment because you haven’t met your deductible costs. Nevertheless, don’t let that stop you from seeking treatment. Most health policies cover a variety of services at no cost to you regardless of whether you’ve paid the deductible. Many policies also cover the majority of costs related to major intervention, like surgery, regardless of your deductible status.
Affording a Deductible
Insurers set various formulas to determine how your insurance deductible affects prices. A general rule of thumb is that insurers decrease premiums if policyholders increase their deductibles. Generally this is because insurers assume a smaller financial risk if a customer shoulders a higher deductible.
If you can afford a higher deductible, taking one means you might pay less for your coverage premium. However, if you can’t afford a high deductible, low-deductible health insurance plans are often quite affordable. Your premium price may increase.
When selecting a deductible/premium balance, consider your own health needs. Make sure your plan will cover the most costs of the care you most frequently receive. Talk to your insurance agent about how to balance your deductible with your health care needs and your income.
Ready for coverage? Get started with us. Miller's Insurance Agency, Inc. can offer you a fast, free quote on a West Chester health insurance plan that meets your needs. Call us at (610) 269-4500 for more information.