No deductible and low deductible health insurance could be a good fit for someone who expects to need many health care services over the next year.
Having health insurance with no deductible can help alleviate the stress of finding money to pay out-of-pocket when you need health care. Instead, no deductible and low deductible health plans offer higher premiums with the understanding that you won’t have to pay the deductible later. There are pros and cons, of course, but no deductible health insurance could be the medical and financial solution that your family has been seeking.
You can’t plan medical emergencies — they come out of nowhere and strike, leaving injury and damage in their wake. When you’re hurt, the last thing you want to do is worry about the cost of medical services, but with the cost of health care skyrocketing, it can be costly.
One health care cost that’s been on the rise over the past decade are deductibles. Rising deductibles means more out-of-pocket costs when members need health care.
According to new data from eHealth, the average deductible for health insurance marketplace plans in 2020 cost $4,364 for single coverage and $8,439 for families. Today, few families have that much money in savings, let alone when a costly accident occurs.
Employer-sponsored health insurance plans’ deductibles aren’t nearly as high, but they’ve still increased in recent years. Kaiser Family Foundation said the average deductible for an employer-sponsored health plan was $1,644 for single coverage in 2020. Twenty-six percent of employees have a health plan deductible of more than $2,000 for single coverage, according to Kaiser Family Foundation.
- No deductible and low deductible health insurance offers limited out-of-pocket costs for health care services but have much higher premiums than other health plans.
- Low deductible and no deductible health plans can cost over $1,000 more in premiums than health coverage with higher deductibles.
- When deciding on a health plan, you should analyze premiums and deductibles, as well as coinsurance, copays, and out-of-pocket maximums.
- You may benefit from health insurance with low deductibles if you have chronic illnesses, expect to become pregnant, need major surgery, or regularly visit doctors.
How does a health insurance deductible work?
A health insurance deductible is the price you pay for health care services before your health insurance company begins to kick in money for covered medical services.
“A medical deductible is simply the risk that you, the insured member, take from the health insurance company,” explains John Millen, Managing Partner of Millen Group in Richmond, Virginia.
The deductible covers your financial responsibility so you can receive medical care. It’s different from a copay, which is often due at the time of service.
Instead, a health insurance company doesn’t start paying for health care until after you’ve met the deductible.
Let’s look at an example. Say a procedure costs $10,000 and your deductible is $1,000. You have to pay $1,000 of your health costs before your insurance company steps in. Once you reach the deductible, you often have coinsurance, which is a percentage of what you have to pay for health care services.
So, let’s say that the bill is $9,000 after the deductible and you have to pay 20% coinsurance on your health plan. In that case, you would be responsible for $1,800 and the health insurance company would pay the remaining $7,200.
After you reach your plan’s out-of-pocket maximum, your insurer pays the full cost of your medical care costs until the end of the plan year.
“The out-of-pocket maximum amount is the most an employee or family will pay out of their own pocket, says Millen, adding that those maximums often exceed $8,000.
Some exclusions do apply, so carefully review the terms of your policy to see how your insurance company handles things like deductibles and out-of-network costs.
The amount of each health insurance deductible can vary, depending on the specifics of your exact health insurance coverage, so refer to your health insurance plan or ask your insurance agent for more details.
How much does health insurance with no deductible cost?
The average monthly cost of health insurance in the U.S. was $456 for an individual and $1,152 for a family, according to eHealth.
When you opt for zero-deductible plan, you’re likely to pay much higher premiums. That is because your insurance coverage costs the insurer more than if you were contributing toward costs with a higher deductible. With that higher risk and, in turn, higher costs, the insurance company charges more.
Millen explains the difference between a low and high deductible.
“A low deductible ($0 to $750) means you are willing to incur the medical cost risk and pay from your own checking account,” he says. “A high deductible ($1,400 and above for single coverage) means you are willing to trade a lower cost (i.e. premium) from the health insurance company in return for taking on more out-of-pocket costs (i.e. risk).”
Finding a health insurance plan with no deductible may be difficult depending on where you live. The marketplace plans use a tiered system of four different metal tiers to fit your personal needs.
Here are the typical insurance tiers from the health insurance marketplace:
|Coverage tier||Monthly premium cost||Typical deductible type||Insurer’s responsibility||Policyholder’s responsibility|
Let’s take a look at the average monthly premiums from Ambetter, which offers plans through the marketplace in 20 states, for Gold plans, which have lower deductibles, and Bronze plans, which have the highest deductibles in the marketplace:
So, as you can see, you may pay more than $1,000 in premiums over the course of a year by going with a low deductible health plan rather than a high-deductible plan. However, a health plan with a low deductible can more than make up for those higher monthly premiums if you rack up hefty medical bills with a high-deductible plan.
What should you consider when choosing a deductible?
A few factors to consider when choosing an annual deductible amount for your health insurance plan include:
Although no deductible insurance helps in a pinch, you’re likely to face high insurance premiums throughout the year. Not everyone has the budget to pay for this added expense month after month, so they may choose to have a higher deductible to help lower monthly insurance costs.
However, it’s important to remember that lower premiums usually mean higher deductibles — and vice-versa.
Where you live
Where you live is important when it comes to no deductible insurance. Some states have particular stipulations regarding insurance requirements, with others outright banning it altogether.
Some states like Florida require specific types of insurance that can affect your health insurance, such as personal injury protection (PIP) coverage or uninsured motorist property damage coverage. This can interfere with your health insurance options and potentially prevent you from obtaining no deductible health insurance.
Copayments and coinsurance
A deductible is just one part of the health insurance cost equation. Two others are coinsurance and copays.
A copayment is the amount that you pay at the time of service at the office. Coinsurance is the portion of the bill you pay after you reach your deductible.
How coinsurance works is that the provider bills the health insurance company. The insurer pays what it owes and then the provider bills you for what’s left.
You’ll want to factor in those costs when deciding on a health plan.
Before you buy health insurance coverage, be sure to review the plan’s network of doctors and healthcare providers to ensure that the included providers are acceptable for your needs.
If you need to see a doctor that’s not covered by your plan, you could face higher out-of-network copays and other penalties. In some cases, your insurance carrier may not cover the services at all, leaving you on your own to foot the entire bill.
Before committing to a new health insurance plan, be sure to inquire about any exclusions that could impact your care.
Is no deductible insurance right for you?
Although no deductible premiums are generally much higher than the average health insurance premium, it can still be a more affordable option for those facing high medical costs.
If you expect to spend a lot of money on healthcare, no deductible or low deductible plans can spare you the out-of-pocket costs with the understanding that you pay higher upfront premium costs.
No deductible health insurance can be a great fit for certain people. You might want to consider zero-deductible health insurance if you:
- Are currently or planning to become pregnant
- Have a chronic illness
- Have a condition requiring frequent doctor appointments or procedures
- Need future major surgery
- Take expensive prescription drugs
- Have a high-risk lifestyle
Frequently Asked Questions
Should I have a high or low deductible for health care?
To find the best deductible for you, consider your current and future medical care. If you expect to have pricey procedures or require frequent care, a no deductible or even a low-deductible health insurance plan could become a more affordable health insurance option for you over the long run.
If you rarely see a doctor and don’t expect to have many medical expenses over the next year, a high-deductible health plan might be a better choice.
What does no charge after deductible mean?
No charge after deductible simply means that you have met your insurance deductible for the year. So, the plan has 0% coinsurance.
At that point, your insurance company becomes financially responsible for your healthcare costs for the remainder of the year when there’s no charge after deductible.
How should I choose a health insurance plan deductible?
A health insurance deductible is a highly personal decision based on your household budget and your healthcare needs.
Just as insurance companies calculate premiums based on risk, you should choose your insurance company based on the risk that your plan presents to you, considering how copays and other costs may affect your total medical care costs each year.
When should you choose a high deductible health plan?
A high-deductible health insurance plan requires you to pay more out-of-pocket costs when you need medical care, but the monthly premiums are much lower, making for an affordable option when you are on a tight budget.
A high deductible health plan may also be a good choice for you if you are generally healthy, don’t require a lot of healthcare, or if you opt for a health savings account (HSA) to save money for your future health care.
What happens if you don’t meet your deductible?
Your insurance coverage doesn’t begin paying for your health care until you meet the minimum deductible on your account. If your deductible is $1,000 for the year, you’re typically responsible for paying for the first $1,000 of your healthcare costs before your insurance carrier will begin to pay.
If you don’t meet your deductible, the health insurance plan doesn’t need to pay its share of health care services and you don’t have to pay coinsurance.