Does your health plan have a deductible? What does that mean? This article will help you understand how health plans with deductibles work and explain how something that can sound a bit confusing might actually be a good thing.
A deductible is the amount you pay for health care services before your coverage kicks in. The concept can sound a little daunting to those of us on a budget. But with proper planning, this can be a great option if you know your family’s needs and plan appropriately.
With many health plans, you pay higher monthly premiums up front for your health care but pay less money when you use your benefits. With a deductible plan, you generally have lower monthly premiums in exchange for paying out of pocket for medical costs.
While you can save a lot of money on premiums with deductible health plans, you have to be prepared to pay the full cost for many doctor visits, hospitalizations, and other bills until you reach your deductible limit.
To help you save money for these expenses, deductible health plans are often linked to a health savings account, or HSA. An HSA is a bank account that you put money in — tax free — to pay for eligible health care expenses (such as doctor visits, lab tests, hospitalizations, prescription medications, and even medical equipment). With these accounts, earnings on savings are allowed to accumulate tax free and roll over year to year, as long as the money is ultimately used to pay for medical expenses.
Is a deductible health plan right for you? If you choose one, it’s very important that you educate yourself about health care costs. You may be surprised when you find out the full cost for health care services, but online resources are probably available on your health plan’s website to help you estimate potential expenses. You will need to make choices about what care to receive and where to get it while keeping cost in mind.
So you should consider how healthy you and your family are, think about what kind of health care issues you might have in the future, and decide if you’re willing to take a more active role in managing your health care and your overall health.