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Personal Finance FAQ

What is a Health Insurance Deductible?

A deductible is the amount of money that you or your family has to pay out of pocket before your insurance starts making payments on your behalf. This is a fairly universal concept in all types of insurances.

A health insurance deductible will range between no deductible and $6,900 for an individual and $13,800 for a family. After you have paid your providers that amount in total for a calendar year, then your deductible obligation is complete, and you will only be required to pay your copay percentages up until the point that you have met your out of pocket maximum.

Again, remember, the health insurance deductible and out of pocket maximum are amounts that reset annually.

Choosing a lower deductible health insurance plan will usually result in a higher monthly cost, but will generally result in lower out of pocket expenses beyond your monthly premiums. A high deductible healthcare plan (HDHP) that is eligible for a healthcare savings account (HSA) may also provide you a way to cover your healthcare costs in a tax-advantaged way now or provide you with another type of retirement account later.

By Jason Hull, CFP®

Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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