What is a deductible in an insurance plan?


A deductible is the amount of money that you must pay for services or benefits covered by your insurance policy, before your insurance company begins to pay.

For example, if your health insurance or auto insurance has a $700 deductible, you must pay the first $700 in medical expenses or repairs. Once you pay the deductible, your insurer will pay for the services covered by the plan. 

The deductible can be annual or per incident.

Annual deductible. The account starts at zero each year. If your health plan has a $1,000 deductible, you’ll need to pay that amount before your insurance covers your expenses. So if you have $5,000 in medical bills that year, you’ll need to pay the first $1,000 before insurance helps. Of the remaining $4,000, insurance will pay all (unless there are copays). The following year, you will have to pay the first $1,000 in health care expenses again. 

Deductible per incident. In this case, you will have to pay the deductible each time you use your insurance. If you have auto insurance with a $500 deductible, you’ll need to pay that amount every time you get your car repaired. Only then will the insurance start to cover your expenses. For example, if you take your car to a mechanic twice in a year and the bill comes out to $2,000 each time, then you will owe $500 each time and the insurance will pay $1,500. This is true even if the repairs are the same. anus.

Typically, health plans have an annual deductible. Car and home insurance, on the other hand, usually have it per incident.

Look at what your policy says

Deductibles can be confusing. Many times, the same insurance can have several types of deductibles. For example, a health insurance plan might have a deductible for general services and another for drugs. You may also have one deductible for each family member and another for the family as a whole. Therefore, reading the policy is important and will avoid surprises. If you have questions, insurance companies usually assist in Spanish.

In the case of health insurance, insurance companies are required to give you a summary of your benefits. This summary should be in easy-to-understand language. The Obamacare law gives certain rights to those who have health insurance. In addition, it makes it easy to compare health plans by rating plans in platinum, gold, silver, and bronze. This classification is based on the amount of the deductible.

Speak to an Experienced Health Insurance Attorney Today

This article is intended to be helpful and informative, but legal matters can be complicated and stressful. A qualified health insurance attorney can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local health insurance attorney to discuss your particular legal situation.

High-deductible health plans (HDHPs) have lower premiums than a traditional coverage. The tradeoff is that you pay a higher, fixed amount, or “deductible,” each year before your plan begins to pay for your care. Generally, there are deductibles for each member of a family and an entire family deductible. Amounts paid toward individual deductibles can be added together to help meet the total family deductible.

After you meet the deductible, you may still have other costs, such as copays and, in some cases, coinsurance. Some HDHPs may cover preventive services and programs even if you haven’t met your deductible. These include prenatal care, cancer screening tests, and programs to help you quit smoking. Ask your plan what preventive services and programs may be covered before you pay the full deductible.

The deductible corresponds to the amount of money that remains the responsibility of the insured in the event of a claim. Its principle is provided for by the insurance code (article L121-1 et seq.).

Each insurance contract (home, car, etc.) must provide special conditions for the terms and conditions for calculating the deductible.

Types of franchise

There are two categories of franchises:

  • simple or relative deductible. It functions as an intervention threshold: the insured is reimbursed for the entire loss beyond a certain amount.

The insurance contract provides for a relative deductible of 200 euros. If the amount of the loss is 150 euros, the insured will not receive anything. If, on the other hand, the amount of the claim is 300 euros, the insured will be reimbursed up to the total amount of the claim (300 euros).

  • absolute frankness. This is the deductible that is most frequently encountered in contracts. The insured is reimbursed only if the amount of the loss is greater than the amount of the deductible. He receives only the difference between these two amounts.

The insurance contract provides for an absolute deductible of 200 euros. If the amount of the loss is 150 Euros, the insured will not receive anything. If, on the other hand, the amount of the claim is 300 euros, the insured will be reimbursed up to 100 euros (300 – 200 = 100).

In the absence of precision in the contract, the deductible is considered absolute.

Franchise redemption

Some contracts allow, in exchange for a higher premium, to have no deductible applicable in the event of a claim. In this case, the insurer reimburses the entire amount of the claim.

Excess calculation method

The method of calculation is variable and can be expressed

  • either by a fixed sum (example: 150 euros)
  • either by a percentage (example: 10% of the amount of compensation)
  • or by a combination of the two
By aamritri

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