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How does a deductible plan work

How does a deductible plan work

Question: 
I'm hoping to save on my health insurance and have been told a deductible plan might be a lot cheaper, is this right? How does a deductible plan work?

Answer: 
Yes, a health plan with a deductible will ultimately lower your health insurance premium. Generally, the higher the deductible, the lower your premium will cost. If you select a deductible plan, you will need to pay for your medical treatment up to the deductible amount you have chosen. Deductible amounts can vary, for example; Bupa's Worldwide Health Options plan offers deductibles ranging from US$425 to US$8,500. Once you have reached your deductible amount, the insurance company will pay for the rest of your medical bill.

High deductible plans are typically suited to those who are in good health and looking for a plan that will protect them if they get sick or injured unexpectedly. For example, a policy holder selects a health plan with a high deductible amount of US$8,500 and, after a serious accident, the policy holder is taken to hospital requiring surgery for a broken leg. The total hospital bill is US$18,000. The policy holder pays US$8,500 towards the medical bill and the insurance company pays for the outstanding amount of US$9,500. During recovery, the insurance company continues to pay for other medical bills such as physiotherapy, follow up medical appointments and prescriptions medications.

Deductibles are usually applied in one of two ways: they can be paid annually or per medical condition. An annual deductible is more ideal as once you have reached your deductible amount, all health care costs are covered for the remainder of the year - regardless of what medical condition you are claiming for. If your deductible is applied per medical condition, then every medical condition will start with a new deductible. For example, if the policy holder requires treatment for a different condition, they will have to pay the deductible amount before the insurance company contributes towards the medical bill.

While a high deductible plan will protect you against expensive medical costs, everyday medical treatments will not be covered initially. Before you reach your deductible, small medical expenses such as doctor’s appointments, prescription medications, dentist check ups, x-rays and other everyday health care expenses will be paid out of pocket. So before you purchase a high deductible plan, it is important to consider your health care needs and the level of coverage you require. Those who would like cover for everyday health care treatments might be better off with a comprehensive outpatient plan or a lower deductible option.

If you are in relatively good health and are willing to pay a deductible towards your medical treatments, then a deductible plan might be the best option for you. Those who opt for a high deductible plan should put some money aside (depending on the deductible amount), which can range anywhere from US$50 to more than US$8,000.

For more information about deductibles and other health insurance benefits that Pacific Prime can offer you, or to receive a free health insurance quote, please contact us today.

     
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