A health insurance deductible is a set amount you pay for your healthcare before your insurance starts to pay. Once you max out your deductible, you pay a copayment or coinsurance for services covered by your healthcare policy, and the insurance company pays for the rest. As a general rule, the higher the deductible, the lower your premium, and vice-versa. The average individual yearly deductible was $5,101 during the Open Enrollment Period in 2024. For families had an average deductible of $10,310. In 2023, the Kaiser Family Foundation (KFF) reported that the average deductible for marketplace plans for medical and prescription drugs is $7,481 for Bronze plans, $4,890 for Silver plans, $1,650 for Gold plans, and $45 for Platinum plans.

How do deductibles work?

A deductible is a predetermined amount that you must pay out-of-pocket before your insurance coverage starts sharing the costs. Until you reach this set amount, you are responsible for paying 100% of the services covered by your insurance plan. Once you’ve paid the full deductible, your insurance will kick in and begin sharing the cost of covered services with you.

An insurance deductible works like this: you have an insurance plan with a $2,500 deductible. You’re required to pay $2,500 in qualifying payments before the insurance pays the bills according to the percentage stated in the plan. After you’ve met the $2,500 deductible, you’ll share the cost with the insurer through coinsurance.

Some of the facts you need to know about health insurance deductibles include:

• Deductibles are not available on some health plans
• The deductible amount you pay can vary from year to year
• The deductible resets at the start of every calendar year
• Your out-of-pocket costs count towards the deductible

Types of Deductibles

When it comes to deductibles, there are various types based on the number of people you cover and the type of health insurance plan you choose. Understanding these differences can help you make the right decision for your healthcare needs.

1. Individual Deductible: This applies to individual health insurance plans and is the amount that an individual must pay out-of-pocket before their insurance coverage begins.
2. Family Deductible: For family health insurance plans, the deductible applies to the entire family’s medical expenses. Once the family reaches the total deductible amount, the insurance coverage starts sharing the costs.
3. High Deductible Health Plan (HDHP): HDHPs typically have higher deductibles but come with lower monthly premiums. They are designed to offer more significant cost-sharing responsibilities to the insured individuals.
4. Low Deductible Health Plan: On the other hand, low deductible plans have a lower upfront cost, but monthly premiums are often higher. This means you’ll pay less out-of-pocket before your insurance starts covering expenses.

Individual vs. family deductible

There are two types of health insurance deductibles: individual and family deductibles. A health insurance plan can have either one of these or a combination of the two. The individual deductible is straightforward, but the family deductible is more complex.

Individual deductible

The individual deductible is a specific type of deductible that applies to individual health insurance plans, providing coverage for one person. It represents the amount that the insured individual must pay out-of-pocket before their insurance coverage begins to share the costs of medical expenses.

In the event you have an individual health insurance plan, your qualifying healthcare payments go directly towards bringing down your deductible. Once you’ve reached the deductible, you start splitting costs according to the plan until you reach the out-of-pocket maximum.

Family deductible

The family deductible is a type of deductible that applies to family health insurance plans, providing coverage for the entire family. It represents the total amount that the family members must collectively pay out-of-pocket before their insurance coverage begins to share the costs of medical expenses. A family insurance plan deductible can get complicated because it has two types of deductibles (embedded and aggregate) and can also have an individual deductible.

• Aggregate deductible: a single deductible for the entire family. Out-of-pocket health costs for all family members are applied towards the deductible.
• Embedded deductible: has a family deductible and individual deductibles, meaning that each family member has their own deductible.
  • For the individual deductibles: when one family member reaches their deductible, the insurance plan goes to split costs for the healthcare of that family member. All other family members still have to pay their costs towards their deductible.
  • For the family deductible: When the family as a whole reaches the family deductible amount, the coinsurance for the health plan kicks in for all family members until the out-of-pocket maximum is reached.

High vs. low deductible

High Deductible Health Plans (HDHPs) have higher deductibles, requiring individuals to pay more out-of-pocket before insurance coverage starts. On the other hand, Low Deductible Health Plans offer lower deductibles, resulting in lower upfront costs for medical services but higher monthly premiums.

A health insurance policy is considered a high-deductible health plan when it has a deductible of at least $1,400 for individual coverage or $2,800 for family coverage.

Advantages of high deductible plans

1. Lower Premiums: High deductible health plans typically come with lower monthly premiums compared to low deductible plans. This can result in cost savings for individuals who are generally healthy and don’t require frequent medical care.
2. Health Savings Account (HSA): HDHPs often allow individuals to open a Health Savings Account (HSA), where they can contribute pre-tax money to use for eligible medical expenses. HSAs offer tax advantages and can help individuals save for future healthcare costs.
3. Incentive for Healthy Living: With higher out-of-pocket costs, individuals may become more proactive in managing their health and making healthier lifestyle choices to avoid unnecessary medical expenses.
4. Flexibility: HDHPs provide greater flexibility in choosing healthcare providers and services, as individuals have more control over their healthcare spending.
5. Long-Term Savings: For individuals who remain healthy and don’t incur significant medical expenses, the lower premiums and potential HSA contributions can result in long-term savings.

While high deductible health plans have these advantages, it’s essential to carefully consider individual health needs, budget, and risk tolerance before opting for this type of plan. Consulting with a healthcare professional or insurance advisor can help in making an informed decision that aligns with one’s healthcare requirements.

Disadvantages of high deductible plans

1. Higher Out-of-Pocket Costs: High deductible health plans require individuals to pay higher out-of-pocket costs for medical services until they reach their deductible. This can be financially burdensome, especially for those who require frequent medical care or have chronic health conditions.
2. Delayed Access to Care: Some individuals may delay seeking necessary medical treatment or preventive care due to the upfront costs associated with high deductible plans, which can lead to more serious health issues in the long run.
3. Limited Coverage for Routine Care: Until the deductible is met, high deductible plans may offer limited coverage for routine services like doctor visits, prescriptions, and preventive screenings, leaving individuals to bear the full cost.
4. Risk of Catastrophic Expenses: While HDHPs protect against significant medical expenses once the deductible is met, there is a risk of facing significant financial burdens in the event of a catastrophic health issue or unexpected medical emergency.
5. Potential for Medical Debt: High deductible plans can lead to medical debt for individuals who struggle to afford the out-of-pocket costs, impacting their financial well-being and credit.
6. Limited Choice for Low-Income Individuals: Some low-income individuals may find it challenging to afford the high deductible and may forego necessary medical care, leading to potential health complications.

Individuals considering high deductible plans should weigh the potential cost savings against the risks and their own health needs. It’s crucial to have a clear understanding of the plan’s coverage, deductible amount, and the availability of financial resources to cover medical expenses. Consulting with a healthcare professional or insurance advisor can help in making an informed decision that aligns with one’s healthcare and financial circumstances.

Which deductible plan is right for me?

The best way to determine which deductible plan is right for you is to look at the cost of the plan versus the amount of the deductible. You want to select a plan that has a deductible that you feel you can comfortably reach, has a reasonable copay, and the monthly premium is within your budget. Don’t hesitate to compare health insurance companies as you look at these aspects. Also, compare your out of pocket vs deductible costs to make sure you don’t get a bill for services that you thought were covered.

High Deductible Plan	Low Deductible Plan
Lower Premiums	Higher Premiums
Higher Deductible	Lower Deductible
Ideal for Healthy Individuals	Suitable for Individuals with Frequent Medical Needs
May Offer Health Savings Account (HSA)	May Not Offer HSA
Provides Catastrophic Coverage	Offers More Comprehensive Coverage
Best for Cost-Conscious Individuals	Best for Those Willing to Pay More for Immediate Access to Care

Choosing the right plan depends on your health and financial situation. If you are generally healthy, rarely need medical care, and prefer lower monthly costs, a high deductible plan with an HSA could be a smart choice. It allows you to save money in a tax-advantaged account for future medical expenses.

On the other hand, if you anticipate higher medical expenses or want more comprehensive coverage with lower out-of-pocket costs, a low deductible plan might be better. While the monthly premiums may be higher, you’ll have better access to medical services and pay less when seeking care.

Consider your health history, financial capabilities, and risk tolerance when deciding between the two options. If you need further guidance, consult with a healthcare professional or insurance advisor to ensure you make an informed decision that aligns with your unique needs.

How much will I have to pay after reaching my deductible?

Once you’ve reached your deductible, you typically pay a copayment or coinsurance for all services covered by your plan. The insurance company takes care of payment for the remaining balance.

Understanding the following terms will help you get a better understanding with regards to the amounts you’ll have to pay for your health care.

• Premium: the amount that you pay for your health insurance each month
• Deductible: how much you need to pay before your health insurance starts to pay for your health care costs as well
• Copay: a set amount of money you pay per health care service that is covered; a copay usually kicks in after your deductible is reached. The amount of the copay depends on your health insurance and the type of service you’re receiving. A typical copay for a routine office visit that’s in-network ranges from $15 to $25 and $30 to $50 for a specialist.
• Coinsurance: a percentage that you pay for your covered health services; coinsurance typically starts after you’ve reached your deductible. If you have coinsurance, the average percentage is 18% for primary care and 19% for specialty care. The actual amount or percentage you pay depends on your plan.
• Out-of-pocket maximum: the most amount of money you will have to pay for your health insurance that year; in 2024, the out-of-pocket maximum for a Marketplace plan cannot be more than $9,450 for an individual and $18,900 for a family.

Are there services that are exceptions to the deductible?

Health insurance plans obtained from the marketplace are required to cover the cost of some preventative healthcare services before the deductible has been met. This is true no matter if you’re looking at HMO plans or PPO plans. Some of these preventative benefits include:

• HIV screenings
• Blood pressure screenings
• Obesity screenings and counseling
• Lung cancer screenings
• Fall prevention
• Tobacco use screenings

Deductible FAQs

Do copays count towards deductibles?

Part of trying to understand out of pocket vs deductible costs is figuring out if copays count towards deductibles. As a general rule, no, a copay does not count towards the deductible. A plan that’s ACA-compliant is required to credit your copays towards your out-of-pocket maximum.

What does “no charge after deductible” mean?

Once you have paid your deductible for the year, your insurance benefits will kick in, and the plan pays 100% of covered medical costs for the rest of the year. After you’ve reached this limit, you will not have copayments, coinsurance, or other out-of-pocket costs ((i.e., you are no longer charged for that year).

In most health insurance plans, the health insurance carrier (also called provider or company) usually only pays 100% of covered medical costs once you’ve reached your out-of-pocket maximum. This threshold is a similar idea to your deductible, except usually higher — meaning you have to spend more money on covered medical costs before reaching it.

What are out-of-pocket costs for health insurance?

Out-of-pocket costs are costs that you have to pay for your health insurance. Sometimes they can be used towards your deductible health insurance amount, but you should check your policy to make sure that your out-of-pocket costs can be applied to your deductible. In fact, the deductible is considered an out-of-pocket cost.

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 that’s 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 doesn’t 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.