How Does a Health Insurance Deductible Work?

What is a Health Insurance Deductible and How Does It Work?

When you purchase a health insurance plan, your deductible plays a major role in how much you pay for care. A deductible is the amount you pay out of pocket for covered services before your insurance plan starts sharing costs. Understanding how health insurance deductibles work can help you compare plans, estimate your medical expenses and decide whether a high- or low-deductible health insurance plan fits your needs. Read on to learn how deductibles work, how they affect your total health care costs and how supplemental insurance can help with expenses not fully covered by your primary plan.

4 min. read

Table of Contents

Key Takeaways

A health insurance deductible is the amount you pay for certain types of covered care before your insurance starts sharing costs.¹
High-deductible health insurance plans often have lower premiums, while low-deductible health insurance plans typically have higher premiums.
Aflac's supplemental insurance can help with out-of-pocket costs your primary health insurance may not fully cover.

How does a deductible work?

A health insurance deductible is a specific amount you must pay for covered medical services before your health insurance plan starts sharing costs. After you meet your deductible, you may still be responsible for copays or coinsurance, depending on your plan.

For example, let’s say you injure your arm and need X-rays, a cast and blood work. Your total bill is $3,000, and your health insurance plan has a $1,000 deductible.² In this case, you would pay the first $1,000 out of pocket. After reaching your deductible, your health insurance would help cover a portion of the remaining $2,000, depending on your plan.

Keep in mind that your health plan may cover some services before you meet your deductible. For example, many plans cover preventive care right away, such as annual checkups, screenings or some vaccinations.

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Types of health insurance deductibles

Different health insurance plans may structure deductibles in different ways. Some common types include:³

Individual deductibles: The amount one person must pay before their plan starts sharing costs.
Family deductibles: The total amount covered family members must pay before the plan starts sharing costs for the family.
Medical deductibles: The amount you pay for covered medical services before your plan starts paying.
Prescription deductibles: A separate deductible that may apply to prescription medications.
In-network and out-of-network deductibles: Some plans have separate deductibles depending on whether you use in-network or out-of-network providers.

Reviewing these details can help you understand what you’ll owe before and after your deductible is met.

Low- vs. high-deductible health plans

Health insurance deductibles can vary widely by plan type. For example, the average deductible for employer-sponsored health insurance is $1,886, while ACA Marketplace plan deductibles can range from $5,850 to $9,800.⁴

High-deductible health insurance usually has lower monthly premiums but requires you to pay more out of pocket before coverage begins. In contrast, low-deductible health insurance usually has higher monthly premiums but allows your insurer to start sharing costs sooner.

Some high-deductible health plans may also pair with health savings accounts, so it’s worth reviewing the requirements for health savings accounts and high-deductible health plans before choosing coverage.

What is a good deductible for health insurance?

The right deductible ultimately depends on your budget, health needs and ability to handle unexpected medical expenses.

A high-deductible plan may work well if you:

Are generally healthy
Rarely visit the doctor
Want lower monthly premiums
Can cover higher out-of-pocket costs if needed

A low-deductible plan may work better if you:

Visit the doctor often
Need regular prescriptions
Expect surgery, treatment or ongoing care
Have dependents on your plan

Health insurance deductibles vs. other insurance costs

Deductibles are just one key factor that influences your health care costs. Some other factors include:

Premiums: Monthly payments you make to keep your health insurance plan active.⁵
Copays: Fixed amounts you pay for certain services, such as a doctor visit or prescription.⁶
Coinsurance: The percentage you pay for covered services after meeting your deductible.⁷
Out-of-pocket maximum: The most you’ll pay for covered services in a plan year. After you reach this amount, your insurance pays 100% of covered care for the rest of the year.⁸

To learn more about these factors, you can review how deductible vs. copay vs. coinsurance costs compare.

Choose an Aflac supplemental insurance plan

Understanding how health insurance deductibles work can help you choose the right health insurance plan and prepare for upcoming medical costs.

If you want extra financial support, Aflac’s supplemental insurance can work alongside your primary plan to help cover remaining costs. We offer supplemental support policies for cancer, critical illness, accident, short-term disability and vision.

Chat with an agent today to learn more about your coverage options and get a quote.

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