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Originally Posted On: http://www.unitedfinances.com/blog/a-simple-guide-to-health-insurance-deductibles/

Health insurance is confusing for many people. Most people think they understand it, but they really don’t.

About 74% of Americans say they know what health insurance deductibles are. Yet, only 51% were able to correctly define what they are. Only 4% of Americans understand all of the terminology related to health insurance.

That lack of understanding can be costly and leave you underinsured when you need coverage the most. Read on to find out how health insurance deductibles work.

What Is Deductible in Health Insurance?

You may have seen the term deductible in other insurance policies like your home or auto coverage. What does deductible mean? It refers to the amount of money you pay out of pocket for health care services before your insurance pays its share.

For example, if you have a health insurance policy that has a $5000 deductible, you’ll pay out of pocket for medical care up until the $5000. Once you reach that mark, then insurance will cover the rest of your health care costs.

There are some exceptions to this rule. Some policies only make you pay a co-pay for doctor’s visits or you don’t pay anything at all for preventative lab work.

This is why it’s so important to understand your health insurance policy before you sign up.

Premiums and Co-Pays

You pay a monthly amount for your health insurance, and you might be wondering why you have to pay more for your health care. Your monthly cost is your premium.

Your co-pay, or copayment, is what you pay at your doctor’s office. This could be a flat dollar amount or a percentage of your bill. Some insurance plans will have a combination of the two.

You might pay $20 for doctor’s visits, $40 for specialists, and 20% for hospital stays. Again, you may have to meet your deductible before these payments kick in, which would leave you responsible for the full bill.

Shopping for Health Insurance

When you shop for insurance, you’ll find that most plans that have a low deductible have a high monthly premium. Plans that have a low monthly premium usually have a higher deductible to meet.

With the low monthly payment/high premium plans, you have to be prepared to pay a lot of money out of pocket if you’re in an accident or need to visit the hospital.

You want to make sure that you know what type of insurance you need. You can then look for sites that give you premium estimates as to how much you’ll pay every month.

For instance, if you need Medigap insurance in Alabama, you can check out a site like MedicareWire that lists the premium payments for different carriers.

As you shop for insurance, you need to look at the entire cost of health care, not only the premiums.

How Do Health Insurance Deductibles Work?

Health insurance policies have so many terms and conditions that it’s easy to get confused. When you shop for health insurance, look at the health insurance deductibles, premiums, and co-pays.

That will help you find an insurance plan that fits your needs that won’t leave you financially broke. For more financial insights, head over to the home page of this site for the latest articles.