Kids and Health Care: More on Deductibles
Most Major Medical plans will offer a variety of deductibles from $500 to $5,000...or even higher. Some high-risk policyholders -- usually people with histories of health problems -- pay closer to $10,000 deductibles. That is truly catastrophic coverage.
The deductible may be expressed as a calendar year deductible or as a per cause deductible.
A calendar year deductible means that you satisfy the deductible once in a calendar year. A per cause deductible is similar to the deductible found in an auto policy. Each time you ding a fender, you are responsible for a deductible. A per cause deductible basically states that each medical claim you incur will have a deductible requirement. Thus, if you had three claims, three deductibles would need to be satisfied before your insurance company would begin to pay benefits.
Example: If your son Elroy has three separate medical claims in a given year and your family's indemnity policy contains a $250 per cause deductible, then you must satisfy three separate deductibles before the insurance company will pay. If your policy contains a calendar year deductible, you only have to pay one deductible to cover the entire year.
Another version of the calendar year deductible is the family deductible. Most plans will specify an individual deductible such as $250 and a family deductible equal to two or three times the individual deductible.
So, if the plan had an individual deductible of $250 and a family deductible of $750, after the family incurred expenses totaling $750, there would be no further deductibles for the balance of that year.
Most of the Major Medical plans contain a deductible carryover provision. If you haven't incurred any claims or received any benefits from the plan, expenses incurred in the last three months of a calendar year may be applied toward the new year's calendar deductible.
In this case, if Elroy has no claims in most of 2005 but does incur $100 of covered medical expenses in November 2005, he can apply that $100 toward the annual deductible for 2006.
Deductibles do have a large effect on the cost of Major Medical plans. A plan with a $100 deductible will cost considerably more than a plan with a $1,000 deductible. So, if you want to save premium dollars, select a plan with a higher deductible -- it will reduce the cost of the premium. But you'll need to have some cash on hand if a health crisis strikes.
