Health insurance deductibles

Learn about health insurance deductibles so you can plan your health expenses in advance.

What is a deductible?

A health insurance deductible is the amount of money you must pay for covered services in a benefit period before Blue Cross and Blue Shield of North Carolina (Blue Cross NC) begins to pay for covered services. The deductible does not include coinsurance, charges in excess of the allowed amount, amounts exceeding any maximum, or charges for noncovered services.

Deductibles are one of the ways you and your insurance company share the financial responsibility for your health care. They ensure that you contribute to your health care costs, which can help keep your insurance premiums lower. Deductibles basically help spread the financial burden of health care costs across plan members.

Deductible scenario

Let's say your deductible is $4,000. That means you'll need to pay for covered services, like doctor visits and prescriptions, out of pocket until your total payments reach $4,000.

Once you've met your deductible (meaning you've paid that $4,000), your insurance kicks in. For the rest of the plan year, you'll only pay part of the costs.

How do deductibles work?

Understanding how deductibles work is essential for managing your health insurance well:

Meeting the deductible: At the start of each year, you will pay out of pocket for covered health care services until you've spent an amount equal to your deductible.

After meeting the deductible: Once you've met your deductible, your insurance plan begins covering some of your medical costs. You're usually still responsible for a portion of your health care expenses through coinsurance or copayments:

Coinsurance: This is a percentage of the costs you continue to pay after meeting your deductible. For example, if your coinsurance is 20%, you pay 20% of the costs, and your insurance covers the remaining 80%.
Copayments: These are fixed amounts you pay for specific services after meeting your deductible. For example, you may have to pay a copay of $30 for primary care doctor visits. Your insurance covers the remainder of the cost. Copayments do not count toward your deductible.

Annual reset: Your deductible amount resets every year. This means you'll need to meet your deductible amount again before your insurance starts to pay its share of your health care costs for the new plan year. Every health insurance plan has a different plan year that doesn't always follow the calendar year, so it's important to understand your individual plan to best manage your health expenses.

Which costs go toward a deductible, and which do not?

Costs that go toward a deductible

Most health insurance plans include a variety of medical expenses that count toward your deductible:

Doctor visits: Payments for visits to your primary care physician or specialists.
Hospital stays: Costs from inpatient care, including room charges and medical services.
Surgeries: Fees for surgical procedures, whether inpatient or outpatient.
Diagnostic tests: Expenses for tests like X-rays, MRIs, blood work, and other lab tests.
Prescription medications: Costs for medications prescribed by your doctor, though this can vary depending on your plan.

Costs that typically do not go toward a deductible

Some costs are generally not applied to your deductible:

Preventive care services: Many plans cover preventive services, such as annual physicals, vaccinations, and screenings, without requiring you to meet your deductible first.
Copayments: Fixed fees for specific services, like office visits or prescription pickups.
Premiums: The monthly payment you make to keep your health insurance active.
Non-covered services: Any medical services not covered by your insurance plan, such as elective procedures.

Types of insurance plans

Deductible amounts can vary greatly. Some plans have high deductibles, requiring you to pay more out of pocket before your insurance starts to cover costs, while others have low deductibles, meaning you'll reach your coverage threshold sooner.

High-deductible plans

High-deductible health plans (HDHPs) typically come with lower monthly premiums but higher deductibles. These plans are often chosen by people who are generally healthy and don't expect to need frequent medical care. HDHPs are also attractive to those who want to take advantage of Health Savings Accounts (HSAs), which offer tax benefits.

Low-deductible plans

Low-deductible health plans (LDHPs) have higher monthly premiums but lower deductibles. They're better for people who expect to need regular medical care, have ongoing health issues, or prefer the predictability of lower out-of-pocket costs when accessing health services. LDHPs help minimize the financial burden of unexpected medical expenses.