Health Insurance policies assign a plan deductible for each person insured up to a maximum number of insured members. An individual plan deductible is easy to understand – the plan deductible is assigned to the one individual covered by the health insurance policy. A family’s deductible is more complicated, because you are dealing with multiple family members who maintain separate deductibles and carriers that can establish the requirement that either two or three members must meet an established family deductible. It is important for Texas consumers to understand how the family deductible is applied and how it impacts their plan selection.
A health insurance plan deductible is a predetermined amount of money that an insured member must pay before the health insurance carrier is required to make any benefit payments. The purpose of a deductible is to keep premium costs reasonable by shifting the initial claims expense from the carrier to the insured member.
Each family health insurance policy is assigned a family deductible which is assigned to either two (2) members of the family or three (3) members of the family depending on the plan design. To illustrate, for example, a family of four (4) has an insurance policy with a three (3) person family deductible of $2,500 each. Each member of the family incurs claims that are applied to the deductible. If any one of the family members reaches $2,500 in claims, each additional claim dollar for that insured member would be subject to the policy’s coinsurance rate, typically 75%/25% or 80%/20% with the smaller percentage being the responsibility of the insured member. If all three (3) members of the family reach $2,500, the claims incurred by the fourth member would not be applied to deductible but would be subject to the 75%/25% coinsurance sharing arrangement.
Texas health insurance consumers spend a great deal of time analyzing the impact of the family deductible – whether two (2) family members or three (3) family members – to their overall coverage. Obviously a policy with a two (2) family member maximum is more advantageous for the consumer than a policy that requires a three (3) family member maximum. However, the incremental benefit between two (2) members and three (3) members is incredibly small. The reason family deductible is not as important as other aspects of coverage such as the individual deductible, the office visit co-pay benefit, the prescription benefit and premium costs is because the likelihood that the family deductible will come into play is extremely rare. Although it could happen that three (3) members of a family each reach deductible in the same year, the possibility is very remote. In order for three (3) members or for that matter two (2) members to reach deductible in a specific year would require a shared health experience such as a serious car accident. It is just too rare for multiple members of a family to all meet the individual deductible in the same year.
The requirement for a family deductible based on three (3) members is not applicable when the family is only comprised of two (2) members. Each insured individual in a two (2) member family is viewed as if each family member maintains separate plans under one family policy.
Since the probability is so low that multiple members of a family all meet deductible in the same year, the advantage given a plan with a two (2) family member requirement as compared to a three (3) family member requirement should be closely evaluated. Even though a lower family member requirement such as two (2) members is more beneficial than a three member requirement, the probability benefiting from the lower family member requirement is so low that very little preference should be given to the plan with lower family member requirement. If all aspects of the plans being considered are equal, the number of family members required to meet the family deductible can be used to make a coverage decision; however, there would be many other aspects of the plans that should be reviewed and understood before using family deductible as the tie breaker.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.