A deductible is the amount of out-of-pocket expenses that must be paid for by the insured for health services before becoming payable by the insurance carrier. The In-Network (PPO) deductibles will be lower than the Out-of-Network (Non-PPO) deductible. Deductibles apply each calendar year and are reset every January 1st. There are two commonly used types of deductibles in health plans: embedded and non-embedded.
First, let us review the embedded deductible. If you are on a family (two or more members covered) medical plan with an embedded deductible, your plan contains two components – an individual deductible and a family deductible. Having two components to the deductible allows each member of your family the opportunity to get his/her medical bills covered prior to the entire dollar amount of the family deductible being met. The individual deductible is embedded in the family deductible.
For example, if you, your spouse and son are on a family plan with a $3,000 family embedded deductible, including an individual deductible of $1,000, and your son incurs $1,000 in medical bills, his deductible is met and your insurance will help pay any subsequent medical bills for your son that year even though the family deductible of $3,000 has not yet been met.
On the other hand, if your insurance policy contains a non-embedded family deductible, (often referred to as an aggregate deductible) an individual deductible is not embedded in the family deductible. In this situation, before your insurance helps you pay for any of your family’s medical bills, the entire amount of the deductible must be met. It can be met by one family member or by a combination of family members. There are no benefits until expenses equaling the deductible amount have been incurred. The best example of an aggregate deductible plan is a Health Savings Account (H.S.A).
If you aren’t sure whether or not the plan you are enrolled in has an embedded or non-embedded deductible – call your insurance carrier! Don’t be afraid to use the 800 number on the back of your ID card. It’s better to know than to guess.