What Is A Deductible?

A health insurance deductible is an amount of a medical bill that you pay before your coverage begins. For example, if you had a $6,000 medical bill and your plan required a $1,000 deductible, you would have to pay the first $1,000 — then your insurance would start covering you for the remaining $5,000.

Sometimes you can find plans, like HMOs, that don’t require you to pay a deductible. And other plans let you choose how much your deductible will be — usually from $250 up to $5,000. But your deductible is connected with your premium — which means the higher your deductible is, the lower your monthly premium will be.

So Why Do Health Plans Have Deductibles?

Deductibles keep costs low for you by protecting the insurance carriers from what they call a “moral hazard”.

Let’s look at it this way — if a rambunctious child never gets in trouble for doing something wrong, the child has no reason to stop. The moral hazard is created by whoever is responsible for not punishing the child — because the child is likely to continue to misbehave if there aren’t any consequences.

When it comes to health insurance, a person is “misbehaving” or abusing their health insurance if they go to the hospital demanding an MRI every time they stub their toe, and wants their insurance to pay for it. The moral hazard is created by insurance companies, because if there isn’t any consequence for abusing insurance, an irresponsible person might.

Deductibles are what protect insurance carriers from the moral hazards. Policyholders have to pay part of medical bills with their own money before their coverage starts, so there is less incentive to try to make excessive insurance claims.

And for responsible consumers, insurance companies have no problem in keeping their deductibles affordable.

Find The Right Plan With An Affordable Deductible

Now that you know why insurance plans have deductibles, the trick is to find a plan that will work with your budget.

And with our professional advice and our free quote service, you can compare different plans from several leading carriers to get the plan with the best deductible for you.