November 22, 2024

What is deductible in health insurance with example?

The deductible amount is the annual amount a patient needs to pay for healthcare services before their insurance starts to cover the services.
Example: If a patient has a $1,000 deductible, they must pay for the first $1,000 of medical expenses themselves, such as doctor visits, hospital stays, tests, and other healthcare services, before the insurance policy begins to pay.

How the Deductible Works:

The deductible is applied to covered services. For example, if a patient needs a surgery that costs $4,000 and has a $1,000 deductible, they would be responsible for the first $1,000, and their insurance would cover the remaining $3,000 (subject to any coinsurance or copayment).
Annual Deductible: Most insurance plans have a yearly deductible that resets each year. Once the deductible is met, the insurance starts sharing the cost of healthcare according to the terms of the policy (e.g., coinsurance or full coverage).

Case 1: A patient has a $1,000 deductible and needs medical treatment that costs $3,500.
- The patient will pay the first $1,000 to meet their deductible.
- After the deductible is met, if the insurance covers 80% of the remaining $2,500, the patient would pay $500 (20% coinsurance), and the insurer would pay $2,000.
Case 2: The patient has already met their $1,000 deductible earlier in the year, and the same treatment costs $3,500. In this case, the insurance would pay its share (e.g., 80% of $3,500), and the patient would only be responsible for coinsurance (e.g., 20% of $3,500, or $700).

Co-payment (Co-pay): A fixed amount the patient pays for a service at the time of care (e.g., $20 for an office visit).
Coinsurance: A percentage of the cost the patient pays after the deductible is met, usually in a shared responsibility with the insurance provider.
Out-of-pocket Maximum: The total amount a patient must pay in a plan year before the insurance pays 100% of covered services.