What is a deductible?
The short version:
Deductibles are a major part of any health plan <<Link>>. The short version: a deductible is the amount of your own money you have to pay the doctor in one year before you insurance company pays (instead of you). Now, there are a lot of caveats, but that is the short version.
The long version:
A lot of the deductible depends on the plan. An example may work best.
If your plan has a $1000 deductible, that means, you personally have to pay $1000 total on medical services (going to the doctor, drugs, scans, etc.) before your insurance will start to pay. That means if you see the doctor 10 times and pay $100 each time, on the 11th time, you won’t pay anything. This is because you spent $1000 (10 x $100) of your own money.
Now for the caveats.
Co-pays: Lots of insurance plans have co-pays <<Link>>. In short a co-pay is when you pay a small amount of the cost and your insurance company pays the rest. Sometimes co-pays count towards your deductible, sometimes they don’t. If the co-pay does count towards your deductible, that means if you have a $10 co-pay (which means your insurance company pays the other $90) to see the doctor, you can see them 100 times before your insurance company pays for all of it (100 x $10 = $1000 (the deductible amount)). If the co-pay does not count towards your deductible, that means you can see the doctor and pay the $10 co-pay as much as you want, your insurance will never pay for all of it because you will never reach your deductible amount. Each time you pay that $10, it does not bring you closer to meeting that deductible amount. Sometimes, depending on the plan, even if you meet your deductible, for some services, co-pays are still required.
Co-insurance: Many insurance plans have co-insurance <<Link>>. Co-insurance is where you split the cost with the insurance company. A co-pay is usually a dollar amount while co-insurance is a percent of the total service cost. For our above examples, if your plan has 30% co-insurance, when you go see the doctor (an appointment is $100), you will pay 30% ($30) and your insurance will pay 70% ($70). If the doctor costs $200, you will pay $60 (30% x $200) and your insurance will pay $140 (70% x $200). Again, depending on the plan, co-insurance may or may not count towards your deductible. If your co-insurance does count towards your deductible, then when you pay your 30% ($30) co-insurance to see the doctor, you will have $970 left until you reach your deductible ($1000 – $30 = $970). You can see the doctor 33 times before you “meet your deductible” a.k.a. you insurance company will pay for everything. However, often times, co-insurance payments are still required for some services even after the deductible is met.
Out-of-pocket maximums: Out-of-pocket maximums are different from deductibles. For more details on the out-of-pocket maximums, go here <<Link>>. Out-of-pocket is tracked separately from your deductible. It is possible that you’ve met your deductible (paid $1000 of your own money), but not your out-of-pocket maximum. In this case, you may still have to pay and you insurance may still not cover everything. Out-of-pocket maximums are kind of like a second deductible that tracks different expenses.
Networks: All plans have a network of doctors<<Link>> that are “allowed”. If you see a doctor who is in your insurance network, the co-pays, co-insurance, out-of-pocket maximums and deductible amounts all probably work as described above. If you see a doctor who is not in your network (they still may accept your insurance, but they can be “out-of-network”) then the rules are different. Typically, when you pay to see an out-of-network doctor, the money may not count towards your deductible, you pay the whole cost (as in there is no co-pay or co-insurance, it costs $100, you pay $100) and it may not count towards your out-of-pocket maximum. This means you probably want to stay in your network. This also means you have to find out who is in your network.
It’s all very complicated. That’s on purpose. By being complicated, insurance companies can get you to pay more and save less.
How can uMed help?
There are certain plans (we call the cliff plans because the deductible is like a cliff) where up to the deductible, nothing is covered. There are no co-pays, no co-insurance, no complex tracking of deductible vs out-of-pocket maximums. Up to the deductible amount ($1000 in our above example), nothing is covered. Everything is on you to pay for. Once you meet the deductible ($1000 in our example), everything is covered 100%. Cliff type plans usually have high deductibles (think $5,000-$8,000 range) and have low premiums. The low premiums make them affordable, except for that high deductible. Most people don’t meet their deductible. Cliff plans are meant to cover you for major hospitalization and big time injuries / illnesses. Because on a cliff plan you are spending your own money to see the doctor, you’ll want to save money. This is where uMed helps. Before, you couldn’t shop and you paid whatever the doctor told you after the appointment. This means you may see the doctor and get charged $200 afterwards and you have no choice but to pay. Now you’re out $200. With uMed, we let you shop for that appointment and you may find it for $90. uMed just saved you $110.
Now you may think, “But $200 gets me closer to my deductible?” It does, but the likelihood of actually meeting your deductible by going to the doctor is slim. Most people meet their deductible on cliff plans by having a major incident (car accident, surgery, being in the hospital).
uMed pairs best with a cliff plan because you as the user save on the premiums each month and you save on the deductible because uMed allows you to shop.
Remember, insurance is complicated on purpose. They want you to not understand and to over pay. uMed is not complicated. That also is on purpose. We want you to have a simple plan that you understand and saves you money.