What is a deductible?
A deductible is the amount of money you pay before your insurance provider begins to pay.
Here’s a simple example to show how a deductible works. Let’s say your health insurance plan has a $1,000 deductible. You get injured mountain biking and receive medical care that costs $5,000. Before your insurance policy covers the cost of care, you must “meet” your deductible. This means you pay $1,000 and then the insurance company picks up the tab for the remaining $4,000. If you have a policy with coinsurance you may also be responsible for part of the $4,000 (often 20%).
Do I have to meet my deductible to see a doctor?
Many health insurance plans cover some services before you meet your deductible. Typically, you can visit your primary care doctor or fill generic drug prescriptions with only a copayment. A copayment is an amount you pay at each medical visit.
However, in the case of an accident, you may be on the hook for the deductible. Consult your policy to understand which services require a deductible.
What happens after you meet your deductible?
After you meet your deductible, you typically still pay copayments when you receive medical care and are still responsible for coinsurance.
Also, deductibles reset each year. You must meet your deductible again after each reset. The date it resets varies by policy.
What is considered a high deductible?
There is an official government definition. As of 2019, the IRS considers an individual plan with a deductible of at least $1,350 to be a High Deductible Healthcare Plan (HDHP).
Why would you choose a plan with a high deductible?
With an HDHP you pay higher out-of-pocket expenses if you get sick or injured, but you pay lower monthly premiums than with a traditional plan. As long as you are healthy, it is usually a more affordable option for health care coverage.
However, this trade-off must be weighed carefully. For some HDHPs, deductibles may be as high as $4,000 for an individual. If you do suffer an accident, you will likely face a large bill.
How can I pay a high deductible?
Beyond digging into your savings account, there are a couple ways to fill the deductible gap in your coverage.
HSA Health Savings Accounts (HSA) are tax-free savings accounts for medical expenses. You can lower your healthcare costs by putting money pre-tax into an HSA. Then you can use that money to pay for medical expenses like your deductible, copayments, or coinsurance. To qualify for an HSA, you must have a High Deductible Health Plan (HDHP).
Accident Insurance Another way to cut the costs of out-of-pocket medical expenses is accident insurance. Accident insurance supplements your standard health insurance.
Accident insurance policies, like Buddy’s policy, typically pay you directly if you get hurt. You can use the money to pay for out-of-pocket medical expenses like your deductible. Or you can use the money for whatever you need—lost or damaged gear, travel change fees, or even fill in income gaps from missed work.
Buddy offers the only on-demand accident insurance. You can buy coverage for as little as a day or as long as a year. If you’re going skiing for a long weekend and want extra coverage for just those three days, you need only pay for three days worth of coverage.
On-demand accident insurance may be a more affordable alternative than either covering the deductible on your own or paying a high monthly premium for a low deductible plan.
The Informed Adventurer
Getting outside and living adventurously doesn’t have be risky— at least not for your wallet. Before you next head outdoors, study your health insurance policy. If you don’t like the idea of paying the stated deductible amount, know that extra coverage is only a few clicks away with Buddy.