How Are Deductibles Applied?

How Are Deductibles Applied?

This example shows how deductibles add up throughout the year. In the example, the deductible is $250 per individual, the plan’s co-insurance is 90%, and the employee’s co-insurance is 10%. Routine immunizations are not covered by insurance and doctor office visits are subject to the deductible. The out-of-pocket maximum is $2,000. Service costs are only for illustration and are not based on any plan or geographic region.

In-network Negotiated Fee Deductible Employee
Pays		 10% Co-insurance Employee Pays after Deductible Employee’s Total Cost …Then Plan Pays
Service 1: Doctor’s office visit $120 $120
(assumes deductible is not met)		 $0 $120 $0
Service 2: Routine immunization $300 $0
(costs for services that are not covered do not count towards deductible or out-of-pocket maximum)		 $0 $300 $0
Service 3: Inpatient surgery $15,000 $250 – $120 = $130
(the remainder of deductible)		 $1,487
($15,000 – $130 = $14,870, x .10)		 $1,617 $13,383
Service 4: Outpatient knee
surgery		 $10,000 $0
(deductible was met)		 $1,000
($10,000 x .10)		 $1,000 $9,000
Subtotal (subject to out-of-pocket maximum) $2,737 $22,383
Total Cost (after out-of-pocket maximum) $25,420 $2,300
($2,000 out-of-pocket maximum plus $300 non-covered service)		 $23,120($22,383 plus $737, amount over out-of-pocket maximum)