As the new year rolls around, it brings with it a fresh start at many things. One important one to pay attention to is your insurance deductible. Insurance plans work in one of two ways:
- Contract year plan. This means your plan begins and ends on a date you initiated coverage, and can be anywhere throughout the year. For example, it could begin October 1st and end September 30th of the following year.
- Calendar year plan. These plans always begin on January 1st and end on December 31st.
What is a deductible?
A deductible is what you will need to pay before the insurance company will start contributing to your medical bills. Deductibles can be anywhere from $0 to $10,000. Typically, deductibles apply every calendar year. This means that between January and December, your healthcare bills would need to exceed your deductible before the insurance company would start paying, excluding copays, coinsurance, and noncovered expenses.
Why does this matter? It matters because as January 1st approaches, if you’re on a calendar year insurance plan, your deductible will reset (go back to zero) and you will have to pay out of pocket for each session to reach your deductible until insurance will begin kicking in coverage for sessions (including reducing your out of pocket expense down to the copay or coinsurance).
The best way for you to find out what kind of plan you have is to call your insurance company (see the phone number on the back of your card), ask them when your insurance plan renews (contract or calendar year), and how much your deductible is – both for in-network and out-of-network providers (if you don’t already know).
* Your insurance plan may specify this in your contract – try searching for annual deductible, deductible, or calendar year. If you are having trouble locating this information, please contact your employer’s HR representative or insurance carrier.