What is a Health Insurance Deductible?
When choosing health insurance, we tend to look only at the premiums. After calculating that it fits in our budgets, we take on the policies without a second lookover.
The danger is that we might let ourselves in for some unexpected expenses, such as deductibles.
Why are there Deductibles?
Your health insurance policy starts after you pay the first premium. Once the policy is in effect, you can expect reimbursement or even no cash-out at all when you use a medical service covered by your policy.
At least, that is true in the long run.
In the short run, the health insurance provider needs to remain self-sustaining. Every client they take on is a potential risk from the moment of their first premium payment. To keep premiums low and simultaneously make sure they can cover any claims, insurance companies use deductibles.
What are Deductibles?
A deductible is the amount you need to pay of your total bill before your health provider starts its coverage. Put it this way: say your health insurance is at a premium of $200 a month. Your deductible is $1000.
The smart move would be to prepare $1200 before buying the policy, just in case you end up using the policy early.
Let’s try to make this even simpler. You pay your premium of $200 and you’re covered.
Say some kind of road accident happened to you, and you require surgery worth $3000. It is covered by your policy, but you have a deductible of $1000. You need to pay the $1000 before your provider will pay for the rest of the bill.
This is only a one-time payment–you don’t need to do it for every bill. But remember this general rule as you choose policies: the higher the premium, the lower the deductible is. The lower the premium, the higher the deductible tends to be.