When shopping for health plans, the dollar amount of the deductible is usually easy to find in plan materials. But with family coverage it may be necessary to dig deeper to find out how much you’ll owe before insurance kicks in to cover your costs. Is there one deductible for the whole family or separate deductibles for each family member embedded within the family deductible? The answer could make a big difference in your out-of-pocket costs.
In a typical plan with a single $3,000 deductible, for example, a three-person family will generally have to collectively spend that amount out of pocket for medical services before the plan starts paying, with few exceptions. But some plans have both a total deductible and separate deductibles for each family member. In that case, the same $3,000 deductible family plan might have separate $1,000 deductibles for each family member.
A plan with an embedded deductible can be a good option if a family knows one of them will likely require more medical care than the others over the course of the year, says Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms.
In the example above, if one family member covered by the embedded-deductible plan has a chronic condition and expects to rack up $2,000 in medical bills, insurance will start paying after the person spends $1,000 even if the family has not reached a total of $3,000 in out-of-pocket payments. But if a plan has a single $3,000 deductible, insurance generally wouldn’t pay until the family has spent the entire $3,000.
The Center on Health Insurance Reforms addressed this issue recently in a blog post, after receiving queries from state marketplace navigators to whom they provide help answering complicated consumer questions as part of a project with the Robert Wood Johnson Foundation.
“Embedded deductibles aren’t for everybody, but for some families they can be very important,” says Corlette.
Under the health law, insurers have to provide consumers with a document that summarizes plan coverage details. But the deductible information doesn’t necessarily spell out whether a plan has one aggregate deductible or multiple embedded deductibles, says Corlette. Consumers may have to call the plan directly to find out.
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