Oct 172011

The majority of health insurance plans have deductibles.  This is an amount of money that you have to pay before your insurance benefit kicks in.  The thing you have to look out for when reading your plan documents is how many different deductibles you have.

Individual deductibles apply to each individual on the plan.  So, if you have a $1000 individual deductible before your insurance will pay and you have four members of your family on the plan then each member will have to reach the $1000 deductible before the plan kicks in.  So you will need to plan for $4000 if you think all of your family members will need that much medical care.

Family Deductibles can either help you or make no difference whatsoever.  Some plans will say that if you’ve met the family deductible then coverage for everyone kicks in.  However, often the “family” deductible just equals the individual deductibles added together.  Sometimes the family deductible will be less than the combined individual deductible but it’s rare.

For example

Individual deductible = $1000

Family of four family deductible = $4000


Rarely will you see:

Individual deductible = $1000

Family of four family deductible = $3000


As you all know, some insurance companies have really crappy plans.  For example my Mom’s insurance plan has the individual deductible mentioned above (but hers is $2500) and it has a Prescription deductible.  This means that she has to pay $1000 out-of-pocket before her insurance will pay for any of her prescriptions.  This is on top of her individual deductible.

The last type of deductible is the differences between In network and Out of network.  Most insurance companies have a higher deductible if you are using an out-of-network provider, but any money you put out counts toward that deductible.

For example you pay $50 it goes toward your in network deductible of $1000, but it also gets counted toward your out of network deductible of $2000.  It’s like a buy one get one free.

However, other insurance policies don’t work like that.  They have two separate deductibles.  One for in network and one for out of network.  In that example the $50 you paid to an in network provider only goes to the in network deductible.  If you have to go see an out of network provider then you have to start all over from $0 to meet the out of network deductible.

It’s important to read your plan documents so you understand how many deductibles you have and how they are applied.

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