Premiums, Deductibles and Your Budget: A Helpful Primer.
255% average deductible increase for covered workers from 2006 to 2015
83% average premium increase for family coverage since 2005
As more of the cost of healthcare shifts to patients, you may be feeling the impact of rising premiums and deductibles. Since these are often the first expenses you’ll pay for healthcare, it’s important to understand what these terms mean and how they affect your budget.
Premium: What you pay each month for your health insurance plan.
When you have health insurance, you pay a premium to be enrolled in the plan. Premiums are paid in addition to your plan’s deductible and copay or coinsurance.
Deductible: How much you have to pay out-of-pocket before insurance pays.
Every insurance plan has a deductible, which varies based on the details of your plan. Your deductible must be met before your insurance will pay for covered expenses — excluding any copay or coinsurance required by your plan. Deductibles reset once a year, which means you’ll have to meet it again each year you are enrolled.
→ In 2017 both the maximum deductible and out-of-pocket limit are $7,150 for an individual and $14,300 for a family.
How do premiums and deductibles work? Think of it like this:
- You need knee surgery that will cost $3,000.
- You have health insurance with a $300 monthly premium, which doesn’t apply to your knee surgery cost.
- In addition to your premium, you have a $2,000 deductible you’ll have to pay on your own before insurance will cover some or all of the remaining $1,000.
You know the terms. Now understand your payment options.
In addition to paying a monthly premium for your health insurance plan, rising deductibles can make it challenging to fit all of your healthcare expenses into your budget. Healthcare providers are adding new payment options that can help make payment more budget-friendly, such as patient financing.
With options such as the CareCredit credit card, you and your family can get the care you need when you need it. In a situation like the example above, you could finance the $2,000 in out-of-pocket costs to reach your deductible over time in convenient monthly payments.* It’s one financial resource that can help you be prepared with a way to pay each time you visit your healthcare provider.
1 Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006-2015.
*Subject to credit approval. Minimum monthly payments required. See carecredit.com for details.
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