New Year. New Medical Deductible. What That Means for Your Family.

January 01, 2019

by Allison Hall on Jan 01 2019

Most insurance plan years begin on January 1, which means that your deductible re-starts on January 1. So, if your trips to the pediatrician were covered in December, you might be paying the full amount in January.

Let’s talk more about medical deductibles.

What is a deductible?

A deductible is the amount that you have to pay towards medical services before your insurance plan will start covering your medical services at a higher rate.

Usually the lower the deductible, the more you (and/or your employer) will pay each month for coverage (i.e. a higher monthly premium). If you knew that you were going to meet your deductible quickly (e.g. having a baby in February) then that might influence how much you choose to pay each month knowing that your medical services would be covered at a higher rate for the rest of the year after you meet your deductible.

 

Let’s consider a scenario where your child breaks her leg and needs $1,500 worth of acute medical treatment. Here are some different examples of how this looks:

Example 1: Your deductible is $500.
You will need to pay the hospital $500 and then the remaining $1,000 of medical expenses will be at your co-insurance rate thereafter, which usually ranges from 0-20% (i.e. you pay the hospital an additional $0-200 in this example). Your in-network medical services for the rest of the year will be covered at your co-insurance rate until you meet your out-of-pocket maximum if applicable (more on this below). You will still need to pay your monthly premium.

 

Example 2: Your deductible is $5,000.
You will need to pay the hospital all of the $1,500 of broken leg expenses. You will have an additional $3,500 to go towards your deductible before your medical expenses will begin to be covered by your insurance company at your co-insurance rate. You will still need to pay your monthly premium.
 

What if my plan has an out-of-pocket maximum?

An out-of-pocket maximum is basically your deductible + your co-pays + your co-insurance.

It is the most that you would have to pay for all medical services that year (not including your monthly premiums). You may have an in-network out-of-pocket maximum and an out-of-network out-of-pocket maximum.

Lots of hyphens there! Clear as mud, eh? Here's a few more clarifications.

An individual out-of-pocket maximum is the maximum amount of money that any one family member would have to pay for medical services that plan year. (Once again, in- vs out-of-network rules may apply.)

A family/aggregate out-of-pocket maximum is the maximum amount of money that the family would have to pay for any of their combined medical services that plan year. (And, once again, in- vs out-of-network rules may apply.)

 

Let’s go back to our previous example of the child who broke her leg and had $1,500 of medical expenses for the unfortunate accident. Let’s say that this child had a rough year and later had to be hospitalized due to a rough bout of the flu adding another $4,000 worth of medical costs. Her expenses for the year now totaled $5,500.

If her individual out-of-pocket maximum was $5,000 then she would have met her individual out-of-pocket maximum and the remainder of her in-network medical costs would be covered by the insurance company that plan year. 

If her family had a family/aggregate out-of-pocket maximum of $15,000 then they would have met $5,000 of it from their daughter. However, no more of that child’s medical expenses from that year would go towards the family out-of-pocket maximum of $15,000.  Poo pah!

 

Medical insurance is constantly changing and the same plan may have different terms from one year to the next. Keep asking questions and contact your insurance broker, your medical insurance company and your healthcare providers for clarification about your policy and your responsibilities for paying your healthcare providers. You can also click here to find more information on medical insurance terminology (i.e. PPO/HMO, In- vs Out-of-network, Plan years).

May you be blessed in health this year and only need to see the doctor for well visits!

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About the author:

Dr. Allison Hall, PT, MPT, DPT is a pediatric pediatric physical therapist and the CEO/founder of bloom (mykidblooms.com), an eLearning platform for parents/caregivers to receive information from pediatric experts. Dr. Hall is determined to improve the access of parents/caregivers to the knowledge of pediatric experts regardless of barriers such as remote living, disabilities and/or inadequate medical insurance. She is part of tight knit party of five plus two rescue dogs. She finds joy in walking in nature, traveling almost anywhere, learning new things, pondering life intensely, caring for others deeply and doing anything that makes for a good laugh with family and friends.


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