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A deductible is the amount of money you must pay out-of-pocket for covered health services before the carrier begins to pay.
This article will explain the different types of deductibles, high-deductible health plans, and when deductibles reset with Justworks plans.
Types of Deductibles
There are two different types of deductibles: embedded deductibles and non-embedded deductibles.
Embedded Deductibles
With an embedded deductible, your health plan will keep track of two different types of health insurance deductibles for each family member: the individual deductible and the family deductible.
When a family member has a healthcare expense, the money they pay towards their individual deductible is also credited toward the family deductible. It’s important to note that no single individual within the family will be subject to paying more than the individual deductible amount of the plan.
There are two ways coverage will kick in, and the carrier will begin paying for the healthcare expenses of any particular family member:
- The family member has had enough personal healthcare expenses that he or she has met the individual deductible. In this case, the health plan begins paying for this person’s expenses but not the health care expenses of other family members.
- Several different family members have each paid enough in individual deductibles that, added together, the family deductible has been met. In this case, the health plan begins paying the health care expenses for the entire family, even the family members who haven’t paid anything at all toward their individual deductible.
All of our Aetna, Kaiser, and UnitedHealthcare plans have embedded deductibles, with the exception of our UnitedHealthcare U8 plan and Aetna B5 and F4 plans.
Non-Embedded Deductibles
With a non-embedded deductible, your health plan will keep track of the family deductible only. Unlike embedded deductibles, the total family deductible must be met before the carrier will begin paying for healthcare services for any individual member.
This means that even if an individual has met their own deductible, the carrier will not begin paying for any healthcare services until the total family deductible has been met.
High-Deductible Health Plans (HDHPs)
An HDHP is a plan with a higher deductible than a traditional insurance plan. Usually, the monthly premium is lower, but you have to pay more out-of-pocket to meet your deductible before the insurance company begins to pay.
An HDHP can be combined with a Health Savings Account (HSA), which is a pre-tax savings account for U.S.-based employees. If you are enrolled in an HSA, you can make tax-free contributions to pay for health insurance costs for yourself and your tax dependents— including doctor and hospital visits, co-payments, eyeglasses, prescriptions, certain long-term care insurance premiums, and COBRA premiums. You can also use your HSA to pay towards your deductible.
Deductible Reset
Regardless of when you enrolled in your health insurance plan through Justworks, all deductibles reset on the calendar year (on January 1st)*.
*If you are switching carriers in between plan years, please scroll down to learn more about how your deductible reset will work.
Note that health insurance renewals take effect on November 1st of each year, which is different than when your deductible resets.
Let’s look at a few examples to help illustrate what this means:
Example 1
You are enrolled in a medical plan that has a $1,000 deductible. By the time of health insurance renewals, your deductible has been met, but you decide to enroll in a new medical plan (effective November 1st) that has a $3,000 deductible.
Remember, deductibles reset on January 1st, not November 1st. This means that between November 1st and December 31st, you would have to pay an additional $2,000 into your deductible before the insurance company begins to pay and before it resets on January 1st. On January 1st, your deductible will reset, and you will have to pay the full $3,000.
Example 2
You are enrolled in a medical plan that has a $1,000 deductible. By the time of health insurance renewals, your deductible has been met, and you decide to enroll in the same medical plan (effective November 1st) that still has a $1,000 deductible.
Remember, deductibles reset on January 1st, not November 1st. This means that between November 1st and December 31st, your deductible will remain satisfied. On January 1st, however, your deductible will reset, and you will have to pay the full $1,000 again.
Example 3
You are enrolled in a medical plan that has a $3,000 deductible. By the time of health insurance renewals, you have only paid $1,000 into your $3,000 deductible but decide to enroll in a new medical plan (effective November 1st) that has a $2,000 deductible.
Remember, deductibles reset on January 1st, not November 1st. This means that between November 1st and December 31st, you would have to pay an additional $1,000 into your new deductible before the insurance company begins to pay and before it resets on January 1st. On January 1st, your deductible will reset, and you will have to pay the full $2,000.
Switching Carriers
If you are switching carriers in between plan years, your deductible may reset on November 1st, or you may be eligible for a deductible credit.
Aetna to UnitedHealthcare
You may be eligible for a deductible credit. A deductible credit will allow you to transfer what you have already paid towards your Aetna deductible over to your new UnitedHealthcare policy. For more information about this process, please contact support@justworks.com.
Aetna to Kaiser or Kaiser to Aetna
You will not be eligible for a deductible credit. This means that what you have already paid towards your Aetna/Kaiser deductible cannot be transferred to your new Kaiser/Aetna policy on November 1st. In this scenario, your deductible will reset on November 1st because you have switched to a new carrier and then again on January 1st.
Switching to an Open Market Plan through Justworks
Deductible credits on the open market are contingent on the carrier’s approval and their ability to provide deductible credits. All deductibles reset on the calendar year (on January 1st). For more information about this process, please contact support@justworks.com.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.