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What is an Insurance Deductible? Why is it Important?

The majority of people have heard of the term deductible and many people know what it means. The purpose of this video series and also these blogs is to ultimately help individuals become better consumers of healthcare. We are starting at square one with this series and I wanted to do these blogs so I could expand on the points I hit on in the videos. Who really wants to watch me talk about embedded and aggregate deductibles for more than 1 minute?! Maybe my 2-year-old daughter who thinks I’m a movie star because I’m on YouTube! But in all reality, I want these videos to be fun and I hope everyone gets a chuckle here and there.

Now let's talk about deductibles and why it is important to understand. What is a deductible? A deductible in health insurance is the amount that you pay for covered healthcare services until the insurance company starts to kick in. Deductibles range from $0 - $8,700 per individual. The maximum deductible for 2022 for a family is $17,100. Can’t imagine having a $17,100 deductible after having 2 kids! It’s amazing the things you get charged for when you go to the hospital. With that being said, that deductible might be suitable for a certain individual, depending on their situation. The lower the deductible the more expensive the premiums are going to be. High Deductible health plans have become much more popular over the years.

Embedded VS Aggregate Deductible:

This is something that is important to know when electing your health plan. If you have any dependents that are going on your plan you definitely want to understand this. An embedded deductible has two deductible amounts within one plan: single and family. The single deductible is embedded in the family deductible, so no one family member can contribute more than the single amount toward the family deductible. An Aggregate Deductible means there is no individual deductible that applies when you have dependents on your plan. This might be something a lot of people don’t understand but it is definitely something to consider when electing your health plan.

High Deductible Plan (HDHP) VS Low Deductible Plan (LDHP)

The maximum high deductible plan amount for 2022 is $8,700 per individual and $17,100 per family. A High Deductible health plan is any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. When you think about how many people elect HDHP’s every year compared to LDHP’s, it is truly astounding. Many people pair a HDHP with an HSA and over the years this has become more and more popular. I’ll talk more about an HSA in future videos and blogs.

What should you think about when deciding what deductible is right for you and your family?

The first thing to consider is, what is your expected healthcare needs over the next 12 months. That includes prescription costs (if applicable), pregnancies, planned procedures, family doctor bills, and the most recent is COVID related costs. The amount of times some people have had to get tested for COVID is insane. Not all health plans cover the cost of every COVID test and that doesn’t include the amount that some people end up paying after being in the hospital. The other thing to consider is what is your budget and what does your financial situation look like. If you have an unexpected medical expense come up, will you be able to pay for it? Do you want to dip in to a savings account to have to pay for a medical bill? Many people don’t realize how much everything is when it comes to healthcare services. Healthcare inflation is continuing to rise, and everything will continue to get more expensive. When you have a family you should take into account the age of your kids and how many times you will be going to the doctor. Kids get sick a lot and I can say that from experience. It seems like we were at the doctor every other week with one of our kids sick.

I hope you have enjoyed the videos and if you made it through this blog, I truly appreciate it! I also need to give a big shout out to the man behind the camera and also the guy who came up with this idea, Alex Myhre. He is a rockstar for Ellerbrock-Norris and he has completely changed the game for our company!

-Phil Nye the Healthcare Guy

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