Deductibles are one of the most common aspects of healthcare, and you’ve likely come across that term when researching health plans. Deductibles can significantly impact your yearly out-of-pocket healthcare expenses, and without a proper understanding of how deductibles work, you may be led to choose a “cheaper” health plan that’ll cost you more money in the long run. 

In the U.S., the average family will spend about $3,733 on their healthcare deductible each year. This hefty expense has even led some to celebrate when their deductible has been met. 

In this guide, we’ll explain exactly what a deductible is, why it matters when evaluating your plan options, and why a plan from Centivo—which typically includes $0 deductibles—might be the smartest choice for you. 

What is a deductible?

A healthcare deductible is the amount you pay out-of-pocket before your health plan covers any healthcare costs. For instance, if you choose a plan with a $2,000 deductible, you will pay the full cost for any healthcare you receive, such as primary care visits, specialist visits and surgeries, until you hit $2,000 in out-of-pocket costs. Only then will your health plan start to cover healthcare expenses for the rest of the year.  

How do deductibles work?

Employers often offer a few health plans for you to choose from, giving you the option of a plan with a lower premium (the amount taken out of each paycheck to pay for your health plan) and a higher deductible or a plan with a higher premium and a lower deductible. If you opt to pay less each month for your health plan, you’ll typically face a higher deductible. On the other hand, if you’re willing to pay a bit more monthly, you’ll usually have a lower, more manageable deductible. 

For example, say you have two plan options:

  • Plan A offers a premium of $100 a month and a $5,000 deductible
  • Plan B offers a premium of $200 a month and a $2,000 deductible

If you went with Plan A, you would pay $100 a month regardless of care and spend $5,000 out-of-pocket before your health plan would pay for care. This means you could spend up to $6,200 a year on your health plan before getting any help paying for your medical costs.

If you opt for Plan B, you would pay $200 a month and only need to spend $2,000 out-of-pocket before the health insurance would help with costs. In this case, your costs could be substantially lower – you would only spend $4,400 a year towards your health plan before your plan starts to pay for your medical costs. 

Any healthcare you get, such as visiting a primary care physician, going to urgent care, meeting with your mental health provider and more, counts towards your deductible. 

Deductibles vs. other health plan costs

How does a deductible differ from coinsurance and copays? Your deductible is not the only cost under your health plan. Once you meet your deductible, you’ll share the expense of any additional healthcare services until you reach the annual limit, known as the out-of-pocket maximum. Your share of the costs either comes in the form of coinsurance or copays.

With coinsurance, you’ll pay a pre-set percentage of the costs for your care, split between you and your health plan. For example, you may be obligated to pay 20% of the price after you hit your deductible, and your health plan will cover the remaining 80%.

If your plan has copays, you’ll pay a set dollar amount for services, which you’ll know upfront. For example, primary care visits may be $25, and specialist visits could be $50 – those costs will be the same every time you go to the doctor. Your health plan will cover the rest of the service cost.

Why choose a plan without a deductible?

Going to the doctor is stressful enough without worrying about what it will cost you later. At Centivo, we understand the struggle of choosing between care and cost – and we want to ensure that our members get the care they deserve at a price they can afford. Typically, Centivo plans have no deductibles and have low, predictable copays. In addition, we have a network of high-quality primary care physicians who are available at no out-of-pocket cost – visits are free. This way, you never have to choose. 

On average, Centivo members pay 75% less on out-of-pocket costs compared with traditional health plans, averaging around $409 per year.

For more information on Centivo’s offerings this open enrollment season and how to enroll in a plan with a $0 deductible, we encourage you to contact your Human Resources department.