If Your Health Insurance Deductible Scares You Choose With Co-Pay
Why should I pay a premium for health insurance if I have to pay a deductible before I can use it? This is the complaint I would most often hear when helping people sign up for health insurance. Many people who have never had health insurance also do not understand it’s value and how it can work for them. This is why they need someone who can not only help them pick out a plan, but who can also educate them on how their health insurance plan works (Here is a good coverage called The Truth About Medicare).
Why do people ask the question presented at the beginning of the article? It’s because many people who have never had health insurance think that once you pay your premium your insurance pays their bills 100%. That’s where the confusion and disappointment starts.
Health insurance and personal responsibility
Your health insurance deductible has a lot to do with personal responsibility. When you choose a higher deductible, in essence, you are taking on more of the responsibility for your health care. By doing so you are raising your personal liability for any covered illness or accident. In turn you are lowering the upfront liability for the insurance company. The reward to you is a lower premium since prices have gone up since the beginning of the ACA. Her is how to use your high deductible health insurance plan when you feel you can’t afford it.
A deductible is like a credit card in reverse. If you have a credit card with a $5000 credit limit and you never use the card you will never receive a bill. Your balance will remain at zero. When you begin to use the card you will begin to receive a bill that reflects what you owe and your current credit limit. You will have the option to pay the entire bill or a portion of the bill, which is your minimum payment.
With a $5000 deductible it’s the amount you agree to be responsible for before you insurance company will pay. Just like a credit card, if you never go to the doctor, you never have to pay your deductible. If you do happen to get sick or injured and you receive a bill of $5000. You will owe the $5000. You will have reached your limit. From that point on for the rest of the year your insurance company will have to help out with your bills according to your insurance contract.
This example does not take into consideration other factors in your policy such as co-pays, coinsurance, and your policy annual limits. This is another reason why if you are new to the individual insurance market you should seek advice before you get locked into a plan that you cannot change for another 365 days.
Choose health insurance that includes co-pays
If you are a generally healthy person one way to avoid paying towards your deductible is by choosing a plans that includes a co-payment for doctor’s visits. If you only have an annual checkup you will only pay your co-payment which usually ranges from $5-$50. Adding copayments to your plan will raise your premiums, which becomes a personal choice.
There is a bright side of the picture. Once you reach your deductible and annual limit for the year you will not owe anything else for covered medical expenses. If you have any other medical issues, no matter how minor, go get it fixed. Do it before the end of the year since your deductible is reset every year.
The sad thing is that not everyone who needs a plan with a lower deductible can afford to pay the premiums even with a subsidy. But everyone, with the right advisor, can be taught how to use their policy in the most economic way.