There are many terms to learn when it comes to health insurance, and your deductible is one of the most important. This is the amount of money you have to pay to your insurance provider before they will pay for some services.

Learning how deductibles work is health insurance 101. In this guide, we’ll explain the various types of deductibles, as well as how paying yours will impact your copay and out-of-pocket costs.

What Is the Average Health Insurance Deductible in US/Florida?

In 2022, according to the Kaiser Family Foundation, the average total cost for family health insurance provided by employers was $22,463. Out of this amount, employees contributed $6,106. The average deductible for individual plans was $1,763.

Types of Deductibles

Health insurance deductibles can vary by provider and plan. It’s also possible to have multiple deductibles on the same plan, such as one for prescription medication and another for family members.

Individual Deductible

The individual deductible is the amount of money you — the policyholder — have to pay before the insurance company will cover some of your medical expenses. In many cases, an individual deductible is separate from the family deductible. So, if you want to cover your spouse or children, then you will need to meet a separate deductible for their coverage.

In family plans, every member also has their own individual deductible to meet.

Family Deductible

The family deductible is the deductible related to healthcare for all of the policyholder’s dependents. Usually, the family deductible is double the individual deductible amount. For example, you may have a policy with a $500 individual deductible and a $1,000 family deductible.

Paying toward individual deductibles also counts toward the family deductible.

High-Deductible Health Plan

High-deductible health plans (HDHPs) have deductibles that are higher than average but lower monthly payments (premiums). Thanks to the higher deductible, the cost of maintaining coverage can be more affordable. However, this type of plan isn’t ideal for people with underlying medical conditions or people who need ongoing healthcare.

Low-Deductible Health Plan

Low-deductible health plans (LDHPs) feature higher premiums and lower deductibles; they are more expensive to pay for, but they offer easier access to coverage if you can afford the premiums.

How Your Deductible Affects Your Premium

People often assume that a premium will pay off their deductible, but that is not the case. Premiums are the fixed fee you pay to have health insurance. Your deductible is met only as you pay for medical services, such as doctor’s visits, diagnostic tests, and procedures.

It can be helpful to think of health insurance deductibles and premiums like a seesaw. As one goes up, another goes down.

Pros and Cons of a High Deductible

A high deductible may be beneficial for someone that only needs simple healthcare. The higher cost means that you are unlikely to meet the deductible during your policy, but you may meet it if you suffer an accident or illness that requires surgery or hospital care.

For example, you could have a high deductible of $15,000, and find out that you need a surgery that will cost $50,000. Instead of paying the full cost, you pay $15,000 to meet your deductible and the rest is covered by insurance.

While saving money on large medical expenses is a good thing, the higher deductible also means you will be paying out-of-pocket for the majority of healthcare. Coupled with a premium, this can feel obsolete for people who are generally healthy and rarely need medical services, leading to a feeling that they are paying more for insurance than they are actually using in healthcare services. This can be especially frustrating for those who prioritize preventive care and maintain a healthy lifestyle, as their infrequent need for medical intervention doesn’t align with the high costs of premiums and deductibles.

Pros and Cons of a Low Deductible

Low deductibles are great for people who have more extensive healthcare needs. When you require ongoing care, paying for your medical bills out-of-pocket would likely be unmanageable. A low-deductible plan allows you to reach your deductible faster, so you have more coverage for your needs.

As a con, the cost of maintaining a low-deductible plan can be quite high. You may be paying over $500 a month to maintain coverage, and the premium does not go away once you meet your deductible.

After Paying My Deductible

After paying your deductible, you will pay coinsurance or copays. Each one works slightly differently. Your premium stays the same after your deductible is met.

Copay

A copay is a fixed amount of money that you pay for healthcare services. This figure is determined by your health insurance provider. You pay the copay after your deductible is met instead of the full cost of a service. So, a doctor’s visit that costs $250 before your deductible may only cost $75 after.

Coinsurance

Coinsurance is the percentage of costs that a health insurance provider pays for after the policyholder pays their deductible. Plans with greater coinsurance coverage have higher premiums.

Out-of Pocket Maximum

The out-of-pocket maximum is the total amount of money you will have to pay for healthcare during your policy year. This essentially spares you from having to pay indefinitely for medical expenses after your deductible is met. The out-of-pocket maximum can vary a lot depending on the type of plan you have, the cost of your deductible, and your coinsurance.

How to Choose the Right Deductible

Getting the best deal on health insurance is important. Rather than just get any coverage you can find, it’s essential to research providers, plans, and deductibles to ensure you get the perfect balance between your cost and coverage.

Consider your current healthcare needs and how they may change over the course of a year. If you expect that you will require more medical care, then a lower deductible is likely a good idea. If you still aren’t sure which type of plan is best, consider reaching out to a Florida health insurance broker.

Coverage You Can Count On And Afford

Reach out to us at Live Health to learn more about getting health insurance in Florida. Our experienced team is here to help you find the best options for your needs and budget.