This means that you are responsible for paying for all medical expenses up to the deductible amount. Once you have met your deductible, your insurance will start to pay for covered expenses.
Understanding your deductible is important so that you can plan for your health care expenses. Make sure to ask your insurance company about your deductible and how it works before you sign up for a plan.
A low deductible is nice if you have to see a doctor often, or if you happen to have some major medical issues that year, because you’ll hit your deductible limit sooner, and your plan will start helping you pay for care and medications that much sooner.
However, a lower deductible also means a higher monthly premium, all other things being equal.
Average Deductibles
According to data from the Kaiser Family Foundation, the average individual health insurance deductible is $4,500. However, deductibles can vary depending on the plan you choose.
As of 2024, the maximum deductible for an Affordable Care Act-qualified Marketplace health insurance plan is $9,450 for an individual and $18,900 for a family. That’s the same as the maximum out-of-pocket limit.
So if you have a plan with the highest allowable deductibles, you will have to pay these amounts out of pocket, or from some other coverage, like a hospital insurance plan. After that, your insurance plan will pay for 100% of eligible costs for the rest of the year, until your deductible resets.
Note: Under the Affordable Care Act, there are some services that are not subject to a deductible.
These include things like preventive care visits and some prescription drugs.
However, most other medical expenses will count towards your deductible, and will be subject to your deductible.
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How to Save Money on Health Insurance Deductibles
A good rule of thumb is to select the highest deductible that you can comfortably afford in the event you need care.
That way, you can keep your monthly costs lower. Save some or all of that price difference, and you should quickly have enough cash on hand to pay your deductible.
There are a few ways to lighten the load when it comes to your health insurance deductibles.
- Choose an HSA-qualified high-deductible health plan (HDHP). HDHPs have lower monthly premiums than plans with lower deductibles, but you’ll be responsible for paying more out-of-pocket before your insurance kicks in. However, if you’re healthy and don’t expect to have a lot of medical expenses, an HDHP can save you money in the long run.
- Contribute to a health savings account (HSA). HSAs are tax-advantaged accounts that you can use to pay for medical expenses. HSA funds can be used to pay for deductibles, copays, and other out-of-pocket medical expenses with tax-free dollars, leading to significant savings on healthcare expenses, net of taxes. As of 2024, you can contribute up to $4,150 in 2024 if you’re single, or $8,300 in 2024 if you’re married filing jointly. Those over age 55 can contribute an additional $1,000.
Good news: There are no income caps or thresholds to take advantage of HSA tax savings. You can contribute tax-free dollars to an HSA regardless of your income. And you don’t have to itemize. You can contribute pre-tax dollars to your HSA and still take the standard deduction.
- Shop around for health insurance. Compare plans from different insurers to find the one that offers the best coverage and price. Make sure to compare the deductibles, copays, and out-of-pocket maximums.
- Need a lot of care? Consider a health insurance policy with a lower deductible. If you have a lot of medical expenses, you may want to consider a health insurance policy with a lower deductible. However, keep in mind that you’ll pay higher monthly premiums for a plan with a lower deductible.
Health plans aren’t a one-size-fits-all solution. By following these tips, you can save money on your health insurance deductible and get the coverage you need.
Do Health Sharing Plans Have Deductibles?
Health sharing plans are affordable alternatives to traditional health insurance products.
In the health sharing world, we don’t use the term “deductible.” Instead, health sharing plan members will have something called a member responsibility amount, or MRA. Some plans will have some different terminology, but the concept is the same: your MRA is the amount you must pay out of your own resources before your plan’s health sharing benefits kick in.
As with health insurance deductibles, the lower your MRA, the higher you can expect your monthly costs to be.
Health sharing plans are a terrific alternative – especially for people who don’t get a big Obamacare subsidy, who are in generally good health with no significant pre-existing conditions, and who want more freedom than an HMO or PPO-style health insurance product allows them to choose their own doctors.
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Get Help Choosing Your Health Insurance Deductible
Researching and comparing available health plans can be time consuming and complex.
Fortunately, we offer a free service to help make the process easy, fast, and stress-free: All you need to do is make an appointment with one of our experienced Personal Benefits Managers for a free consultation, quote, and enrollment assistance.
Our PBMs will help you determine what subsidies you may be eligible for, if any, and help you find the plan that provides the best value and protection for your situation and budget.
This service is free… There’s no additional charge. All we ask is that if you’re satisfied with the service your PBM provides when you sign up, that you tell your friends and family so we can help them, too!
For Further Reading: Myths and Misconceptions about Health Sharing: What the Mainstream Media Gets Wrong | Why Health Conscious People are Attracted to Health Sharing Plans | Colorado Residents: What To Do With Your Tax Refund in 2024
Misty Berryman is a Personal Benefits Manager at ColoHealth. Her aim is to help you make smart and informed healthcare coverage decisions that will fit your needs and budget. Read more about Misty on her Bio page.
