Deductibles – What Are They and Why Do Some Plans Have Them?

Posted on March 16, 2011

Many health insurance companies, including HNE, offer plans with deductibles. In this article, we’ll answer some common questions about deductibles, including:

• What is a deductible?
• Why do some plans have deductibles?
• How does my deductible work?
• How can I become more engaged with my care, especially since my plan now has a deductible?

What is a deductible?
A deductible is the amount of money you must pay out of your pocket to a provider (for example, doctor or hospital) before the health insurance company pays a portion of the cost. Once you’ve paid the deductible amount, the health insurance company begins to pay for covered services. Different plans may have different services that count toward the deductible. For example, a plan may have a deductible for inpatient hospital services but not for an office visit to a physician. All of this information is explained in the plan documents sent to you when you enroll.

Why do some plans have deductibles?
Deductibles serve two main purposes

1. They are a way to share in the cost of care.
2. They offer consumers a glimpse of the true cost of care.

Health insurance premiums rise because they are directly related to the cost of care. A number of factors contribute to rising costs of care. Some of the main ones include:

• New medical technologies and new medicines.
• An aging population
• Longer life expectancy
• Wide-spread obesity
• An increase in the number of people with diseases such as cancer, diabetes and asthma

Deductibles help insurance plans pay for services that are typically unexpected expenses such as emergency care, onset of a disease, or a surgical procedure. If we set aside insurance dollars to cover those unexpected expenses, then we need deductibles to pay for some amount of care first.

How does my deductible work?
If your plan has a deductible, you should become familiar with the services that apply. Once again, refer to your plan documents or call Member Services. Often, preventive services are not part of the deductibles. This serves as an incentive to take advantage of care designed to identify the early onset of a disease. You should understand how close you are to satisfying or fulfilling the deductible.

You can do this by:

• Reviewing your Explanation of  Benefits (EOB) – a statement sent to you after each time you receive covered services
• Signing up for HNEDirect, our secure web portal. Go to this link to sign up now: hne.com/Membership/HNE_Member.html
• Contact HNE Member Services

How can I become more engaged with my care, especially since my plan now has a deductible?
If your plan has a deductible, make sure you’re fully engaged in every cost decision. Are you using less costly generic medications when available? Are you attempting to see your Primary Care Provider (PCP) for non-urgent care before going directly to an emergency room? It’s also helpful to let your provider know you have a plan with a deductible. Often they will work with you to balance the highest quality care in the most cost effective manner.

Deductibles are a first dollar or upfront cost sharing mechanism used to keep the cost of monthly health insurance premiums in check. If you have a plan with a deductible, understand the details and engage with your providers about the cost of care.

Categories: Spring 2011