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Health Insurance Deductible
A health insurance policy deductible is the amount you’ll pay out of pocket for covered medical expenses before your provider begins to pay for them.
So, suppose your deductible is $2,000. In that case, you’ll need to spend $2,000 on services included in your coverage before your insurance will cover any portion of your expenses. Generally speaking, the higher your insurance premium, the lower your deductible.
Out-of-Pocket Maximum
The out-of-pocket maximum for health insurance is the most you’ll have to pay before your insurance covers 100% of your medical expenses and bills. The federal government sets the out-of-pocket maximum, which, in 2022, can be no more than $8,700 for individuals and $17,400 for family plans.
This maximum amount applies to all levels of health insurance coverage, whether you get it through an employer, the insurance exchange, or a licensed private broker. Even though the out-of-pocket maximum might seem high, it can significantly benefit families.
For example, suppose someone has a long-term illness or the sudden onset of a medical problem that requires extensive care, tests, surgery, or hospitalization.
In that case, this maximum out-of-pocket cost can be met quickly.
The security of knowing that a severe illness or injury won’t bankrupt you is worth the monthly premium expense.
Deductible vs. Out-of-Pocket Costs
It’s essential to understand the difference between your deductible and out-of-pocket maximum. However, it may be confusing since spending money to meet your deductible is also an out-of-pocket cost.
Knowing how your deductible works with your out-of-pocket expenses is also helpful. Your deductible will vary depending on what type of insurance you have. Still, the maximum out-of-pocket expenses will be the same, no matter your coverage, as mandated by the ACA.
Your out-of-pocket expenses include your deductibles, copays, and coinsurance payments. However, your out-of-pocket costs don’t have your monthly health insurance premiums, and they don’t include any medical bills for out-of-network care. Your coinsurance goes towards your deductible, but non-covered prescriptions, out-of-network doctors or treatment, and any over-the-counter medications don’t count toward your deductible amount.
