What Is a Health Insurance Deductible? An Example

A health insurance deductible is the amount you may have to pay for covered services subject to the deductible before your plan begins paying its share. It is separate from the monthly premium you pay to keep coverage. The HealthCare.gov glossary notes that plans can have an overall deductible, separate deductibles for some services, or both. Your plan document decides which costs count.

Example: a $1,500 deductible and 20% coinsurance

Assume you have paid nothing toward a $1,500 deductible, and an in-network covered service has an allowed amount of $2,000. If the plan applies a 20% coinsurance rate after the deductible, you pay the first $1,500, then 20% of the remaining $500, which is $100. Your total for this example is $1,600; the plan pays $400. This uses the allowed amount, not a provider's higher sticker price. It also assumes no copay, other coverage rule, or out-of-pocket limit changes the calculation.

If you had already paid the full deductible, the same $2,000 allowed amount with 20% coinsurance would instead leave you paying $400 and the plan $1,600. A coinsurance percentage is different from a copay, which is usually a fixed dollar amount for a covered service. Some copays apply before you meet the deductible; check the actual plan terms.

Does every service require meeting the deductible first?

No. Many Marketplace and other plans cover specified preventive services at no extra charge when provided in-network, even before the deductible is met. The preventive-service rules have conditions, and an office visit may include other chargeable care. Other plans may have separate drug, family, or out-of-network deductibles. Do not assume that a bill or premium payment automatically counts toward the deductible.

The out-of-pocket maximum is a different limit

For covered in-network care, your plan's out-of-pocket maximum limits eligible deductibles, copays, and coinsurance you pay during the plan year. After you reach it, the plan pays 100% of covered benefits under the applicable rules. Premiums, noncovered services, and some out-of-network costs do not count toward that limit. HealthCare.gov recommends comparing total yearly costs, not only the premium or deductible.

When comparing plans, read each Summary of Benefits and Coverage. It shows the deductible, cost sharing, out-of-pocket limit, and standardized care examples. If a bill seems wrong, compare the insurer's explanation of benefits with the provider's bill and ask which charges were covered, allowed, and applied to your deductible.