How Do Deductibles Work on Health Insurance?

Video Transcript

"This is John Pinelli, financial representative, talking to you today about how deductibles work on health insurance. Health insurance policies will typically have some sort of deductible. Some will have no deductible, but most insurance...health insurance policies will have some sort of deductible, typically ranging from 1,000 all the way up to 5,000 dollars. Now, the way that this deductible works is this is the amount of money that you must pay out of pocket before your insurance policy starts to pay any money. So if you have 1,000 dollar deductible and you go into the hospital and require 3,000 dollars worth of care, you would pay that first 1,000 dollars. And then the remaining 2,000 dollars would be divided up between you and your provider based on what percentage they decide to cover beyond that. So you could end up paying more out of your pocket than just the deductible, and this is based on the percentage of services and what type of services your health insurance provider will cover. So don't think that just by satisfying your deductible, that your insurance company's going to cover everything beyond that. It's important to look into your individual health plan and to see exactly what's covered. But as a general rule of thumb, your deductible will be the amount that you will pay out of pocket before your insurance company starts to pay anything. Now, typically, insurance policies with a lower deductible will carry a higher cost, whereas insurance policies with a higher deductible will carry a lower cost. The reason that the low deductible plans are more expensive is that it's a lot quicker that you will satisfy that deductible -- that 500, that 1,000 dollars will be paid a lot more quickly than if it was three or 5,000 dollars. So the insurance company will start paying more quickly on the policy and their coverage or their amount that they will pay will start to initiate a lot sooner and based on a lot smaller of a medical claim than something that's a higher deductible, like three or 5,000. So this has been John Pinelli, financial representative, talking to you today about how deductibles work."