Insurance Deductibles Explained: How to Meet Your Deductible (in 12 Easy Steps)

 

You pay a monthly premium for insurance coverage that protects you if disaster strikes. In addition to paying your monthly premiums, you're also responsible for paying the deductible—that's the amount of money you pay before your insurance company will pay. You might choose a policy with a higher deductible in exchange for a lower monthly premium, but then an unexpected illness, injury, or accident can leave you scrambling. That's why we've compiled some of the best options available for you to meet your insurance deductible so you can move forward. 

 

 

Method 1

Find out how your policy is structured.

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   Your policy determines how much you pay upfront. Generally, your insurance covers the cost of your claim minus the deductible. Some insurers will simply take the deductible out of your claim, rather than requiring you to pay it upfront. The claims adjuster can help you understand exactly what you'll need to pay out of pocket right away.^[1]

   • Health insurance deductibles are annual, which means you have to spend that amount on healthcare each year before insurance kicks in. For example, if your deductible is $1,000, and you have a $750 treatment and a $400 treatment, you would only pay $1,000 and your insurance would cover the other $150.^[2]
   • For example, if you're in a car accident and your car is in the shop being repaired, you'll typically have to pay the deductible upfront to get your car. If the repairs cost $1200 and your deductible is $500, that means you'll pay the $500 and insurance will pay the rest.
   • On the other hand, suppose you've filed a claim against a homeowner's or renter's policy. If your claim is $5,000 and your deductible is $500, that means your insurance will only pay $4,500—it's up to you to cover the extra $500. That could simply mean that there are things you can't repair or replace for a while.

Method 2

Determine how much you'll pay after your deductible.

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   You may still have to pay a percentage of your costs, up to a certain amount. The amount you pay after your deductible is called "coinsurance." You pay that percentage, up to the "out-of-pocket maximum." After you've reached the out-of-pocket maximum for the year, your insurance covers 100% of your costs. Your specific plan tells you exactly how much you'll pay for healthcare after you've met your deductible.^[3]

   • For example, suppose you have an insurance policy with a $1,000 deductible. After the deductible, you pay 20% of your healthcare costs until you reach the out-of-pocket maximum of $5,000. So if you needed emergency surgery that cost $8,000, you would pay a total of $2,400: your $1,000 deductible plus 20% of the remaining $7,000, which amounts to $1,400.
   • In the previous example, the $2,400 you paid would apply to your out-of-pocket maximum. You would only need to spend another $2,600 on medical care during the year before insurance would cover 100% of your healthcare costs.

Method 3

Stay in-network for healthcare.

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   Costs you pay to in-network providers count towards your deductible. Healthcare providers who take your insurance are considered "in-network." If you get any treatment from a healthcare provider who isn't in-network, your insurance won't cover it at all. Generally, only treatment that insurance would ordinarily cover counts toward your deductible.^[4]

   • For example, suppose your doctor refers you to an in-network specialist for treatment that costs $900. If your deductible is $1,000, you'll still have to pay for that treatment, but it'll go toward your deductible. You only have to pay for another $100 in healthcare to meet your deductible.
   • Your health plan has a list of healthcare providers in your area who are in-network. Be diligent about checking this list to make sure any treatment you pay for will go toward your deductible.
   • Some plans cover a percentage of out-of-network expenses after you've met a separate, out-of-network deductible.

Method 4

Only get healthcare that counts towards your deductible.

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   Spend money on healthcare early in the year. If you want to meet your deductible early to maximize your insurance benefits, focus on the services you need that aren't already covered by your insurance. If you need treatment from specialists, that can be a good way to eat away at your deductible.^[5]

   • The amount you pay for your monthly premiums, as well as any copays, doesn't count towards your deductible. Copays are flat dollar amounts that you pay for something. For example, if you pay $20 for prescriptions regardless of the cost of the prescription, that's a copay.
   • Preventive services, such as check-ups and vaccines, are typically covered by your health insurance regardless of whether you've met your deductible. However, diagnostic tests that your doctor might order as a result of a check-up are not—so the cost of those would usually count toward your deductible.^[6]

Method 5

Set up a health savings account (HSA).

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   HSAs are typically offered through your employer. If your employer offers HSAs as part of the health plan, you choose an amount to deposit in your HSA out of each paycheck. This money isn't taxed. Additionally, employers typically match the amount you deposit in your HSA (up to a specified maximum). You can use this account to cover health-related expenses, including meeting your deductible.^[7]

   • If you don't get your health insurance through your employer, you can still set up an HSA if you have a high-deductible health plan. Check with your plan provider to see if they partner with a particular HSA financial institution or go to https://info.hsasearch.com/ to compare HSA options.^[8]

Method 6

Ask about discount and assistance programs.

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   Many healthcare providers have assistance programs for low-income patients. These assistance programs can help you pay for healthcare services until you meet your deductible—but usually, you have to ask about them first. Don't expect healthcare providers to automatically sign you up.^[9]

   • For example, when you're scheduling an appointment, you might ask the nurse at reception, "Are there any assistance programs available for people who have trouble paying for services here?" They'll be able to tell you if those programs exist, and how you can apply for them.
   • If you're taking a prescription drug and need help paying for it, check the website of the pharmaceutical company that manufactures the drug. They often have discount programs available if you have a low income or meet other criteria.
   • Nonprofit hospitals and healthcare providers are more likely to have assistance programs.

Method 7

Get help from family and friends.

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   Talk to people who might be willing to front you the money. You can ask for donations or structure it as a loan—that's up to you and whoever's willing to help. It can be embarrassing to find yourself in a position where you have to ask others for help, but people understand how it is to be caught in a bind.^[10]

   • If you feel comfortable doing so, use social media to explain your situation and ask for help. You could also set up a crowdfunding campaign to try to raise money.
   • If you don't feel comfortable going public with your situation, see if a trusted friend or family member is willing to help you out. You might feel a little better about it if they spearhead the campaign and ask for money on your behalf, rather than you doing it yourself.

Method 8

Try to work out a payment plan.

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   Ask your healthcare provider if you can pay over time. Larger hospitals might have more standardized payment procedures that allow you to apply for credit and make affordable monthly payments. Even if they don't have a system in place, smaller providers might be willing to take payments depending on the circumstances.^[11]

   • If you work out a payment plan with a healthcare provider, make sure to get the terms of the plan in writing. When you make the final payment, ask the healthcare provider for a letter stating that you've paid your bill in full.
   • It's also possible to work out a payment plan if you're working through auto or homeowner's insurance, although it's less common than in the healthcare setting.^[12]

Method 9

Take out a home equity line of credit.

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   Use the money to cover your deductible. If you have equity in your home, talk to your bank or mortgage lender. With a home equity line of credit (HELOC), you borrow against the equity in your home. You can then use the proceeds of the loan for any purpose. Repay the balance in monthly payments, similar to a credit card.^[13]

   • When you apply for a HELOC, the lender considers the appraised value of your home as well as your ability to repay the loan (your annual income and credit history).
   • The application process can take some time, so if you don't already have a home equity line of credit, this might not be your fastest option to get the money you need.

Method 10

Borrow from your 401(k).

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   Contact the company that holds your 401(k) to take out a loan to cover the deductible. Not all plans allow this option, so you'll have to check for sure. If yours does, you simply choose the amount of money you want to borrow and sign a loan agreement. You'll make payments back into the plan to pay the money back, usually over 5 years.^[14]

   • The IRS limits the maximum amount you can borrow to $50,000 or half the amount you have vested, whichever is less. Some plans also set a minimum amount you can borrow.
   • This is a good option if you have a low credit score, since you'll likely qualify for a lower interest rate than you would if you tried to get a loan through a bank.

Method 11

Tap into your Roth IRA.

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   If you have a Roth IRA, you can make a withdrawal any time you need money. While you do lose years of tax-free growth with this strategy, you won't have to pay a penalty if you only withdraw from the principal. On the other hand, if you also withdraw earnings, you'll have to pay regular taxes plus a 10% early withdrawal penalty if you're under 59.^[15]

   • Since your Roth IRA is an investment plan, making a withdrawal triggers a sale of stock. If the market is down, your withdrawal might end up costing you more than you think. Look into this and talk it over with your broker before you go this route.

Method 12

Apply for a short-term loan.

 

 

Short-term loans can get you the money you need, but you'll pay high interest. Lenders who offer short-term loans, also called "payday loans," advance you a small amount of cash that you pay back incrementally over a short period (usually less than a year). These lenders charge extremely high interest rates, but they can get you out of a pinch.^[16]

• Only use short-term loans as a last resort and make sure you can afford the payments or you could wind up in deeper financial trouble.
• If you can pay the loan off early, you'll end up paying less. Do everything you can to get out from under this type of loan as soon as possible.