In health insurance, a deductible is a specific amount of money you must pay before your insurer provides help with medical expenses. Family policies under the Affordable Care Act (ACA) often have one of two deductibles: aggregate or integrated deductibles.
how does a built-in deductible work?
In a health plan with a built-in deductible, the policy will have two deductibles: the individual deductible for each covered family member and a family deductible. Due to the two deductibles, the coverage provided by the insurer for integrated policies can be accessed earlier.
When a family member accumulates enough medical expenses to the point of meeting their individual deductible, health insurance benefits after the deductible, such as copays, coinsurance, and cost sharing, will be provided by the insurer. however, these will be provided only for that family member. other family members still would not be eligible for the same benefits.
Once the medical expenses of several members of the family are added up and exceed the family deductible, the insurer would begin to pay the covered medical expenses for all members of the family. this applies even if a member did not meet her individual deductible.
integrated deductible example
Let’s say your family has a health plan with an individual deductible of $3,500 and a family deductible of $7,000. if your spouse experiences an injury with medical expenses of $3,500, your spouse would have met his or her individual deductible and he or she would have his or her medical expenses covered for the rest of the year. but you and your child would still have to pay out-of-pocket costs until the family deductible or your individual deductible requirement is met.
Suppose that, later in the year, you and your son have collected $3,500 in medical expenses together. therefore, combined with the $3,500 of health care costs previously incurred by your spouse, you would meet the $7,000 family deductible limit. At that point during the plan year, you will no longer have to pay any deductibles and the insurer will begin paying for covered medical expenses for the entire family.
integrated vs. non-integrated deductibles
Family health insurance plans can have one of two types of deductibles:
Integrated and non-integrated deductibles differ in how the deductible level is met. Plans with non-integrated deductibles, also known as aggregate deductibles, don’t start paying medical expenses until the full family deductible is met. furthermore, there are no individual deductible amounts for each family member. The two types of deductibles are similar in that once the family deductible is met, the insurer covers medical expenses for all family members.
built-in deductibles for high deductible health plans with hsas
for 2019, to qualify to contribute to a health savings account (hsa), a high deductible health plan (hdhp) with an embedded deductible must have a minimum individual deductible of $2,700. In addition, for an HDHP to remain an HSA-qualified plan, it cannot provide plan benefits until the minimum IRS deductible is met. Any HDHP plan with a lower deductible would violate IRS regulations, as the plan would pay benefits before the minimum is met, making the plan ineligible for HSA contributions.
On the other hand, let’s say the policy you selected had a built-in deductible of $3,000 individual and $6,000 family. if you incurred medical expenses of $3,500, you would meet your individual deductible limit and your insurer would start paying your medical expenses. In addition, the minimum IRS deductible of $2,700 would be met and the plan would qualify as an HSA.
These minimums set by the IRS can change each year and therefore it is important to recognize them, as you may not be able to open or contribute to an HSA if your health plan does not meet the requirements. Employers that provide health insurance coverage should also be aware of these changes to confirm that the HSA policies they offer to employees comply with IRS regulations.
Which deductible is better: integrated or added?
Family health insurance plans typically contain built-in deductibles, but that doesn’t mean you should ignore a plan with an added deductible. Plans with built-in deductibles are best when you anticipate that a family member will have a large amount of medical costs during the year.
Say you know your spouse may be experiencing knee discomfort and are considering surgery to fix the problem. This operation could cost tens of thousands of dollars, and you would benefit greatly if your health insurance subsidized most of the bill. In this case, purchasing a plan with a built-in deductible would be better because the lower individual deductible would allow medical benefits to be paid sooner for your spouse. And, if you have relatively few medical expenses, your total family deductible payments for the year may be less than the family deductible.
The additional benefit of the deductible comes at the cost of a higher monthly or annual premium you pay for the policy. Added deductible health insurance policies are cheaper and can save you money if you think a family member won’t incur a large medical expense during the plan year. however, this can be risky as it is difficult to predict your anticipated medical expenses. We recommend evaluating your family’s health situation and choosing a plan with a deductible that fits your coverage needs.