What Are Insurance Deductibles?

December 15, 2022

Dr. Jerry Williams of Urgent Care 24/7 discusses a medical health insurance topic that is frequently poorly understood in our urgent care centers nationally; insurance deductibles.

Many people don't understand what their deductible is, and there's a lot of confusion between insurance deductibles, which was what this talk is about, and copays. Let's explain what an insurance deductible is. An insurance deductible is the amount of money you have to pay out of pocket before your insurance benefits start paying towards your medical care. So frequently, we'll have patients come into Urgent Care 247, because we don't accept health insurance of any kind. We think that health insurance, primary care, and urgent care are unnecessary costs. So we can eliminate that cost by eliminating health insurance for primary care and urgent care, and can pass that savings on to our patients.

Frequently patients will come in and say "oh, but I have insurance that I have a $75 Urgent Care copay". Then we ask them, "Have you met your annual deductible yet?" They don't know what that is, so they don't understand that. Even though they have a copay for urgent care, they're likely to get a bill in four to six weeks after their insurance has been billed. The insurance will then tell the provider, this person hasn't yet met their annual deductible deductible amount, which is the out of pocket expense, and then you're going to get a bill for the remainder of the visit.

Now, deductibles are per patient. So if you're a family of four, you may have to have a $4,000, $5,000, $7,000 up to $10,000 per person deductible. Now, what that means is that there are some caps they'll put on family deductibles, depending on the policy. But typically, family policies are husband and wife policies have a per person deductible. So you have to pay, if your deductible is $5,000, you have to come out of pocket $5,000 per person for your care, before your insurance will pay a penny.

The copay is a participation or utilization fee, where you have to pay a copay for that service when you go to the doctor's office, to the urgent care center, or to the emergency room. That is different than a deductible, because the deductible is your total out of pocket expense that you have to pay per year before your insurance starts paying any benefit. An interesting thing too is that frequently we'll see patients who will help meet their deductible in December of the year. Keep in mind that when your policy renews typically on January one, your deductible renews as well. So you have to start all over again.

In fact, insurance companies use actuarial tables to figure this out, because they're riding insurance on huge numbers of pop patients, large populations. So it's really statistics. It's a math problem to the insurance companies. They do the math well. In fact, they do the math so well, that about 80% of all patients never meet their deductible. Think about that 80% of us who have insurance pay for insurance 12 months out of the year, so we never meet that out of pocket deductible. So the insurance company never has to pay a dime for coverage.

Now there are other 20% of those patients who meet their deductible, so they'll get some benefit paid out from their insurance, their health insurance. So if you're starting to figure out that all this money you're paying for health insurance is a scam. It's because it's. So big business has got it figured out, and they're going to do a hedge. That's what health insurance is that you're hedging your bets against. If you have a catastrophic illness or life threatening illness, where you would have a very, very high medical expense that would bankrupt you. The number one cause of bankruptcies in America is medical costs, healthcare costs. So you have health insurance to hedge your bet against this health crisis, which could leave you inside, or would eat up your net worth or a large part of it. Now, it's important to understand, though, that when it comes to health insurance and deductibles, you need health insurance in place.

The problem is, we got away from major medical, and we went to a health insurance that we expect to cover everything, like even the minor things like urgent care, primary care, and flu shots.

Keep in mind, your annual deductible is an important part of the equation for your health insurance. Dr. Williams hopes that's useful to you. He hopes you can put that information and knowledge to use when it comes time to renew your health plan next year, and you can save yourself some money and find the plan that's best for you and your family.

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