For many people learning about health insurance can be very difficult and confusing. There is a lot of terminology and it is sometimes given alternate meanings in different contexts. One of the most important terms to understand is the deductible
The deductible is the amount of health care billed through your insurer that you have to pay for. If you have a $500 deductible, your insurance will pay for your health care costs that are above $500 for the year. So if you have just one bill all year, and it is for $600, the insurance company will pay $100 of the bill. You are responsible for the first $500.
Only money you spend towards medical care billed through your insurer counts. If you pay for medical care or eye care or dental care on your own, it does not count towards your deductible. Always have your medical provider bill you through your insurance plan, even if you know you are going to have to pay for it. That way the service will count towards your deductible and you will often get a reduced rate as insurance companies are billed at lower rates then individuals.
The money you pay towards your monthly premium does not count towards your deductible. That is just the cost you have for the plan. It can be frustrating to pay out high premiums every month, only to have to pay even more towards your deductible when you get sick. Health care is very, very expensive. There is no such thing as cheap insurance for it. If you want proper medical care, it is going to cost you a lot of money.
Also, your deductible resets to $0 every January 1st. No matter how much you spent the previous year towards your deductible, you have to start all over at the beginning of the new year.
Some health plans will offer a shrinking deductible. If you do not satisfy the deductible in your first year or so, the deductible automatically reduces without raising the premium. These plans can be a great way to save money if you are relatively healthy.
