Understanding Health Insurance Costs: Premiums Deductibles & More
In almost any area of your life, if you dont have a clear idea of your expenses, you may feel like youre not in control. But, when you get clear about all the costs, you feel in control, helping you make the right choices. To get a clear understanding of your health insurance costs, the first step is to look at all the key types of costs, not just obvious expenses. Its a lot like adding up your automobile expenses some of the clear costs include your car payment, insurance, gas, oil changes and repairs. Less obvious costs include the finance charge on your payment, windshield wiper fluid and parking tickets. Lets take a look at obvious health insurance costs and some examples.
When Do You Pay The Deductible For Car Insurance
A better question might be, when do you not have to pay the auto insurance deductible? In most cases youre on the hook for it, however if youre in an accident which another driver is at fault for, this is not the case. You also dont pay a deductible if the claim youre filing is covered under liability insurance, which covers injuries and property damage in accidents you are at fault for. This is only the case as long as the costs fall within the range of the coverage you purchased, however. Lastly, a diminishing deductible may ultimately lead to a reduced deductible or even none at all. This kind of deductible rewards drivers for avoiding accidents by reducing their deductible each year they remain accident-free.
When youre choosing a deductible, keep in mind that you may be more or less comfortable with higher out-of-pocket costs vs monthly costs. A high deductible will lower your overall insurance rate, however it will increase your out-of-pocket costs if you file a claim.1
Other Exceptions To Deductibles
While most cost-sharing benefits only kick in once the deductibles have been met, health plans can and do make a few exceptions where copays come into effect beforehand. For instance, all plans are required to cover preventive care at zero cost to the consumer.
Other exceptions to deductibles offered by plans include:
- Copays on a set number of visits to primary care physicians.
- Many catastrophic and high-deductible plans allow patients to pay a low copay for PCP visits even before deductibles are met.
- A number of plans offer up to three visits to the PCP for a copay.
- Generic drugs are also often excluded from the deductible requirement with an established copay applying at all times.
Recommended Reading: Usaa Phone Number For Auto Insurance
What Is An Auto Insurance Deductible
A car insurance deductible is the amount of money you agree to pay out of pocket for car repairs or replacement after an accident. Keep in mind that a deductible would not apply for minimum coverage policies. If you have full coverage with either comprehensive or collision coverage, or both, your deductible would apply. For example, if you are involved in an accident causing $5,000 of damage to your vehicle, and you have a $500 collision deductible, the insurance company would pay $4,500 of the claim while you are responsible for $500.
You determine your auto insurance deductible amount with your insurance agent or carrier before finalizing your auto insurance policy. However, you should have the option to change your deductible at any time.
What Are Insurance Deductibles
An essential part of an insurance contract, a deductible is the amount the policyholder agrees to pay out of pocket before the insurer shoulders the cost of coverage.
One important thing to note, however, is that although it is common in the industry to hear after paying for a deductible, most of the time, policyholders do not actually pay anything to their insurance providers. Rather, they pay for something equal to the deductible amount car repairs or medical tests, for example then the insurer pays out for the rest of the coverage up to the maximum limit.
In some instances, insurance companies subtract or deduct hence the term deductible the amount from the insured loss before paying out up to the limits of the policy.
Also Check: The Hanover Insurance Group Regional Office
What Is Insurance Deductible
Insurance deductible pertains to the amount of money on an insurance claim that you would pay before the coverage kicks in and the insurer pays. In other words, its the money that you would shell out of your own pocket before receiving insurance coverage. After paying your deductible, the insurance company will start paying the remaining amount of the claim value up to the limits indicated in the policy.
Is A $2500 Deductible Good For Home Insurance
A $2,500 deductible is on the upper end of deductible amounts for most standard homeowners insurance policies, which means it should result in some of the lowest premiums. However, whether that amount is good for home insurance or not depends on your affordability of $2,500 out of pocket if there is a claim. If you can afford $2,500 out of pocket when needed, having a deductible that high might save you some big bucks on your annual premium.
Read Also: Home Insurance Claim Adjuster Secret Tactics
Whats The Difference Between A Deductible And An Out
Your deductible is the amount of money you have to pay for eligible healthcare services before your insurance plan covers costs. Your out-of-pocket maximum is the amount you must spend on eligible expenses before your insurer begins covering all your costs.
Qualifying expenses for your out-of-pocket maximum vary by plan but often include:
- Medical treatments
Its easy to confuse deductibles and out-of-pocket maximums. The two numbers may even be the same. That said, out-of-pocket maximums are often higher than deductibles. For instance, you may have a $1,500 deductible and a $4,500 out-of-pocket maximum.
Do Copays Count Toward The Deductible
In most cases, copays do not count toward the deductible. When you have low to medium healthcare expenses, you’ll want to consider this because you could spend thousands of dollars on doctor visits and prescriptions and not be any closer to meeting your deductible. Better benefits for copay plans mean higher costs.
Don’t Miss: Bristol West Car Insurance Phone Number
Whats The Right Deductible For Me
The answer to this question depends largely on how many people youre insuring, how active you are, and how many doctor visits you anticipate in a year.
A high-deductible plan is great for people who rarely visit the doctor and would like to limit their monthly expenses. If you choose a high-deductible plan, you should begin saving money so that youre prepared to pay any medical expenses up front.
A low-deductible plan may be best for a larger family who knows theyll be frequently visiting doctors offices. These plans are also a good option for a person with a chronic medical condition.
Planned visits, such as wellness visits, checkups on chronic conditions, or anticipated emergency needs, can quickly add up if youre on a high-deductible plan. A low-deductible plan lets you better manage your out-of-pocket expenses.
When You Might Need To Pay An Auto Insurance Deductible
You may be required to pay a deductible each time you file a claim for damage to your vehicle.
So, if your car is damaged by hail in a covered incident, you’ll have to pay your comprehensive deductible before your insurance company will step in. Or, if your vehicle is damaged in a covered accident, you’ll have to pay your collision deductible.
However, if you’re in an accident with another driver that’s determined to be his or her fault, you may not have to pay your collision deductible. The at-fault driver would pay for any covered damage to your vehicle or you may pay your deductible upfront and get reimbursed from the at fault party through subrogation.
You might also decide not to file a claim at all if the cost of repairing any damage is less than your deductible amount. Remember that policies are different and insurance varies by state. Read your policy carefully to make sure you understand your coverages and deductibles.
Read Also: Self Employed Health Insurance Deductions
How Much Is The Deductible
Deductible amounts are regulated by your state. The amount of your deductible can often be decided upon when signing up for coverage, but it’s also listed in the terms and conditions of your insurance agreement. Your independent insurance agent can further explain your state’s laws regarding deductibles in your area, as well as help you find a policy with a deductible that works best for you.
Does Yearly Drug And Premium Cost Include Deductible
Before you enroll in a Part D plan, check that your medications are covered under the plan’s formulary. When you enroll in Part D, there are plan fees in addition to your original Medicare costs. These fees include a yearly drug deductible, monthly drug plan premium, drug copayments, and coinsurance.
Read Also: Low Income Car Insurance Ca
How Does A Persons Driving Record Affect The Choice Of Deductible
The current thinking is the cleaner the driving record, the greater the consideration one should give to a higher deductible as it will lower premiums. On the other hand, for someone with a less-than-clean driving record, the person should consider taking a lower deductible, despite the additional premiums. You can also consider a program that rewards safe driving, like Nationwides Vanishing Deductible, which allows you to earn $100 off of your comprehensive and/or collision deductible for every year of safe driving. Up to $500 total.1
The bottom line is that choosing the right deductible takes time and consideration. A specialized insurance agent can help consumers make the best decision based on their driving record, current finances, credit record and overall financial planning goals.
1 , Accessed December 2021.
What Is The Average Deductible Cost
Because consumers choose varying types of car insurance coverage with different monetary limits, deductibles can vary significantly from one driver to the next. For most drivers, typical deductible amounts are $250, $500 and $1,000. According to MoneyGeek’s data, the average car insurance deductible amount is approximately $500.
Recommended Reading: How To Cancel Geico Renters Insurance
Is It Possible To Lower My Home Insurance Deductible
Before you lower your homeowners deductible, know that a decrease in deductible will result in an increase in premium. However, if you do not have the money to pay your deductible out-of-pocket if needed, it is wise to decrease the deductible to a more affordable amount. To do so, contact your insurance agent to discuss your options.
What Deductible Plan May Be Right For Me
If you dont anticipate needing many medical expenses for the upcoming plan year, a high deductible health plan may be the most economical one for you. If you do anticipate upcoming medical expenses, a low deductible plan might help you get the most mileage out of your plan.
| High deductible health plans may appeal to those who: | Low deductible health plans may appeal to those who: |
|---|---|
| Are young and generally healthy | Are 65 or over |
You May Like: Is Sclerotherapy Covered By Insurance
Find The Right Health Insurance And Deductible With Ehealth
At eHealth, we can help you find the right health insurance plan that meets your need for healthcare coverage. We can help you understand the different types of health deductibles, explain copay vs coinsurance, and show you different healthcare plans that relate to your personal needs. eHealth offers comprehensive health insurance services that help you make the best possible choice for yourself and your family.
We can help you no matter if you need short-term health insurance or need to find a doctor. You can compare plans on one page, and the comparisons are written in plain language thats easy to understand. You can get a quote for health insurance plans of your choice, make your decision and purchase your selected plan all in one place.
Our support doesnt end after you purchase your plan. eHealth is committed to helping you get the most out of your health insurance with the support of our licensed insurance agents. Our agents are here to help you understand the benefits of your plan, premiums, and any questions you may have about your health insurance coverage.
Related Articles
What Does This Mean For You
Basically, if you raise your deductible, youll likely cut insurance costs and therefore have less to pay up front. But youll be left having to pay more when you file a claim.
According to William Davis of the Insurance Information Institute, limiting your out-of-pocket expenses is virtually the solereason for choosing a lower deductible policy. Otherwise, its up to the policyholder and their circumstances.
“There really aren’t any other benefits other than having to pay less out of pocket in the event of a loss,” Davis says.
“But policyholders should discuss their individual situation and insurance needs with their company representative or agent to ensure they understand their coverages, the deductibles that are available, and how those things will affect them in the event of a loss.”
Also Check: Auto Insurance For Young Adults
When Do You Have To Pay Car Insurance Deductibles
You have to pay your car insurance deductible if you cause an accident that damages your vehicle and you file a claim using your collision insurance. If youre at-fault for an accident and are injured, you will have to pay a PIP deductible, too. Most situations where you use your own insurance, youll need to pay a deductible, sometimes even when youre not at-fault.
Other Situations With No Deductible
An auto insurance deductible won’t apply to you in the following scenarios:
Another person files a claim against your liability coverage
There is no car insurance deductible on a liability claim, meaning you pay nothing out-of-pocket for an accident in which your insurer pays for the damages and/or injuries you caused to another person, up to your policy’s limits.
You selected a disappearing deductible
Some insurers offer a “disappearing deductible” program that lowers your deductible a set amount for each violation- and claim-free policy period. After a certain number of policy periods, you can end up with a $0 deductible for comprehensive or collision claims. However, your deductible typically resets to its original amount after filing a claim.
You have free repairs on glass claims
In some states, your insurer may repair or replace your windshield without requiring a deductible, or they may give you the option of choosing a $0 deductible for glass claims. Other insurers, including Progressive, may waive your deductible if they can repair your windshield rather than replacing it.
Read Also: National Fire & Marine Insurance Company
Family Plans With Individual Deductibles
This type of plan has an overall family deductible and each family member also has their own individual deductible.
For example, in a family of four, if any family member reaches their individual deductible, then the deductible is satisfied for that family member. Additional claims for that family member are paid by coinsurance, no longer contribute to the family deductible, and are applied to the out-of-pocket maximum.*
If any combination of family members deductible amounts totals the family deductible maximum, then the deductible is satisfied for the entire family. Additional claims for everyone in the family are paid by coinsurance and are applied to the individual and family out-of-pocket maximums.
*The out-of-pocket maximum is the most you could pay for covered medical expenses in a year. This amount includes money you spend on deductibles, copays, and coinsurance. Once you reach your annual out-of-pocket maximum, your health plan will pay your covered health care costs for the rest of the plan year.
VIDEO
Choosing The Right Deductibles
While buying a health plan, it is not a safe and secure idea to choose an exorbitant deductible amount for a lower premium value. It is essential to make a sound and informed decision to make health insurance act as solid financial coverage. If you wish the insurance company to bear most of the medical costs, it is wise to choose a lower deductible and pay a higher premium.
Read Also: Difference Between Ad& d And Life Insurance
How Does Your Deductible Affect Your Rate
According to rogersgray.com, the deductible amount you select directly affects how much you’re going to pay for your insurance policy. You can expect a lower premium when you have a high deductible. This figure represents your insurance company’s portion of responsibility for a claim, so when you agree to pay more out-of-pocket, your insurance company won’t have to spend as much after an accident.
A lower deductible almost always means higher monthly payments. However, the advantage of a low deductible is that you have more coverage from your insurance company and you have to pay less when you file a claim. USAA is one of the cheapest insurance companies surveyed, based on the standard driver profile. Every driver’s rate may vary, so make sure to get a quote.
Information and research in this article verified by ASE-certified Master Technician Duane Sayaloune of YourMechanic.com. For any feedback or correction requests please contact us at research@caranddriver.com.
Where To Find And How To Change Your Deductible
If you happen to forget what amount of a deductible you chose, you can always check out the on your insurance policy.
If you have a policy with Lemonade, you can simply open the app and pull up your deductible. Want to youd like to change your deductible at any point? Click Edit Coverage on the home screen of the app, scroll down to the deductible section, and go for it. Youll receive confirmation of your updated policy via email, right away
Don’t Miss: State Farm Life Insurance Quotes
Hurricane And Named Storm Deductibles
In hurricane-prone regions of the country, like Florida and many oceanside counties on the Atlantic coast, special hurricane deductibles may be triggered and applied to named storm or hurricane damage claims. In Florida, you pay a hurricane deductible on a per season basis rather than for each individual storm.
The criteria for what can trigger a named storm or hurricane deductible generally varies from state to state, but insurance companies typically need to wait until a storm or hurricane has been officiallydeclared or named by the National Weather Service.
Davis also notes that deductibles can be a very important issue in hurricane-prone places.
“Policyholders need to determine how their state’s hurricane deductibles which are a percentage of the home’s value instead of a set dollar amount will impact their ability to handle the total amount they would have to pay out of their own pocket in the event of a loss.”