What is a Deductible for Health Insurance and a New Health Coverage Option that limits their Impact
As Health Insurance premiums continues to increase businesses and families are scrambling to find ways to maintain quality health coverage without breaking the bank. One trend has been buying lower cost policies which has an unpleasant effect of increasing deductibles and out of pocket insurance maximums.
Health insurance premiums across the country for a family of four now range from $400 to $2000. What largely dictates the cost is the deductible. The higher the premium the lower the deductible and of course the lower the premium the higher the deductibles. It is common to see deductible from $500 to $10,000 and out of pocket maximums of another $3000 to $15,000.
Let’s first make sure everyone understands their financial liabilities with deductibles and out of pocket maximums/coinsurance. A medical deductible is the amount you are billed first before your insurance starts to cover your expenses. Coinsurance is the percentage you pay after satisfying the deductible, but before you reach your out of pocket insurance maximum. Below are two case studies of a high and low deductible policy
A simple example would be if you break your leg and you have it fixed by a doctor in your network (Remember going outside you network always costs more). To fix your leg let’s assume the total medical bill is $7000. If your policy deductible is $7000 or higher then this accident will not be a covered medical expense. In this case you will have to pay all of the expenses leaving you wondering if you actually have health insurance.
Now let’s assume you have a very expensive policy with a deductible of $1000. In this case you would pay $1000 and your insurance company would pay a portion of the remaining $6000 balance. This portion is based on your out of pocket maximum and coinsurance. A realistic out of pocket maximum and coinsurance for $1000 deductible policy might be $4000 and 30%. So on the remaining balance you would owe $1800 (30% times $6000). Giving you a total out of pocket of $2800 you paid for your leg.
As you can see traditional insurance leaves gaps that some families can’t afford. There is another Health Coverage option that is gaining popularity because it is low cost and saves families from the deductible nightmare. It’s Medical Discount Plans also known as Health Discount Plans.
The leader in this market is American Workers Insurance Services and their plans come with rich benefits backed by “A” rated insurers. Some of the key insurance backed benefits are hospitalization intensive care, hospitalization, critical illness, accident death and dismemberment, prescriptions, doctor and dentist visits and accidental injury to name a few. What makes this policy so popular is the wide range of coverage, no deductibles (Except a $100 deductible per accident with the accidental injury benefit) and the low premium of $219 for any family size.
Let’s see how this policy would work with our broken leg example. If you remember it cost $7000. Like health insurance you would go to a medical provider in your network saving on average 30%. This leaves a $4900 balance. Your deductible is $100 and the remaining balance is paid by insurance. Not bad for a family policy with a low premium of $219.
As you can see Medical Discount Plans are worth looking into if you want to save money and escape the deductible nightmare. To learn more sign up for my free mini-course that explains many of the Medical Discount Plan benefits.
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