Under most health insurance plans, there is a certain amount of risk that the policyholder assumes called the policy deductible and out-of-pocket deductible. While these assumed risks sound as though they can be interchangeable, they are actually quite different.
- Out-of-pocket maximum: An out-of-pocket maximum is the highest amount you’re expected to pay out of pocket for deductibles and co-insurance costs. Deductibles and co-insurance is paid out of the pocket of the policyholder and goes towards the out-of-pocket maximum. Once you’ve met this limit, you will no longer be responsible for these costs. Note that co-payments (prescription or treatment related) and policy premiums do not count toward your out-of-pocket maximum.
- Deductible: A deductible is the amount of money the insured is responsible for towards medical treatments. Once you’ve met your deductible, your policy will then pay a percentage or all of the cost for additional medical treatments that your deductible applies to. With some health insurance plans, such as high deductible plans, the policyholder is permitted to open a health savings account which allows him a tax-efficient way to save money to pay his deductible.
A policy with a low premium sounds great but if it has a deductible you can’t hope to afford or if the out-of-pocket maximum exceeds what you have saved, it could mean that you will have trouble handling your end of medical expenses you’re responsible for. Weigh these costs against your budget. Working with your agent, you can adjust these amounts to better fit into what you can afford for medical costs. Get a California health insurance quote now.