How Do Family Deductibles Work?

If you’ve got kids, chances are your budget includes everything from paying for groceries, clothing, extracurricular activities, and childcare to end-of-year teacher gifts and regular haircuts.

What’s another major expenditure that can affect your budget? Health insurance. For many, a family health insurance plan may make the most sense as it helps prevent healthcare costs from mushrooming out of control. That’s because each family member’s individual deductible¹ contributes to the family deductible. But how do family deductibles work? ¹

If you are a family of four, each with a $500 deductible on a plan with a $1,000 family deductible, every dollar paid toward each person’s individual deductible also goes toward the family deductible. Once the $1,000 family deductible is met, all four family members start receiving post-deductible benefits, even if the individual deductibles haven’t been met.²

A bit confusing, right? It helps to look at family deductibles in detail.

January

• Dad pays $100 toward his individual $500 deductible, leaving $400 to be met.
• Family deductible of $1,000 is credited $100, leaving $900 to be met.

February

• Mom pays $200 toward her $500 deductible and daughter pays $300 toward hers.
• Mom now has $300 left to pay and daughter has $200 left to pay toward their individual deductibles.
• Family deductible of $1,000 is credited mom and daughter’s total payments of $500 —combined with dad’s $100 payment in January. This leaves $400 to be met.

March

• Son pays $50 toward his $500 deductible, leaving $450 to be met.
• Family deductible of $1,000 is credited this additional $50, leaving $350 to be met.

April

• Mom pays $300 more toward her $500 deductible — with the $200 she paid in February, she has met her individual deductible and her healthcare will now be paid for by the plan.
• The family deductible is also credited this additional $300, leaving $50 to be met.

May

• Son pays $50 toward his deductible.
• The $1,000 family deductible is now met, allowing the entire family’s care to be covered — regardless of the fact that the son, dad, and daughter have not yet met their individual deductibles.

Family deductibles make financial sense because they encompass individual deductibles. In the example above, if this family of four didn’t have a family health insurance plan, they’d have to spend $2,000 instead of the $1,000 to meet their deductibles.

There are a few other things to note:

Preventive Services. Under some plans, certain preventive care services don’t require a deductible, copay, or coinsurance².³ So you don’t have to worry about missing your mammogram, kids’ vaccines, or flu shots, for example, if you haven’t yet met your deductible.

Understanding Your High-Deductible Health Plan. These plans, also called HDHPs, use what’s called an aggregate deductible — meaning that unlike the family plan example above, an HDHP³ doesn’t pay for any individual’s coverage until the family deductible has been met.⁴

But there is an exception here: Health insurance plans can’t require one individual to pay a deductible that is higher than the federal out-of-pocket maximum for individual coverage, or $8,150, even if that person has an aggregate deductible as with an HDHP.⁵

This means that if dad must have back surgery in the new year and the family’s aggregate deductible is $11,000, he’ll be covered by his insurance once he pays $8,150 toward the surgery. The rest of the family then has to meet the deductible’s remaining $2,850 before they, too, can be covered.

Many parents find family health plans offer them the best coverage at the most reasonable price. To make sure you’ve found the best fit that won’t break the bank, pay attention to your family and individual deductibles, and pick a plan with overall costs that won’t be too hard to meet.

If you are looking for an option to help manage your medical bills, consider healthcare financing through the CareCredit credit card. The CareCredit card is an easy way to pay for health and wellness care and offers promotional financing options.* To apply, go to carecredit.com/apply.