You may have come across the term “Deductible” in reference to medical insurance and wondered what that means. A deductible is a payment made to the insurance company at the time of signing up for an insurance plan. The deductible amount can vary from plan to plan but is usually equal to the monthly premiums you pay. Insurance companies either include the deductible in the cost of your coverage, or they will take it out of the money you pay yourself. It is important to understand how much of the deductible will be before you select a policy.
You may wonder why you have to pay a deductible if the insurance company is not going to cover the entire amount. There are a few different reasons for this. First, the deductible is often a minimum payment required by law. It is really an additional fee you have to pay to get medical coverage. The insurance company will cover the rest.
Second, you may have agreed to a deductible that is less than the total amount of your insurance. If you have taken a policy that has a lower deductible, you may agree to higher deductibles to save money. However, you may also have signed up with a plan with a standard deductible amount. It is important to remember that standard deductions are always adjusted for inflation.
When you start your application, the medical underwriter will ask to see your deductible history. They will look at how much you have already paid in deductibles and whether you have maintained the level you were at when you applied. If you have not made any adjustments in deductibles and your premium has not increased, your rates will stay the same. If you have made adjustments, it will not reduce your policy unless they are below the lowest rate that would apply.
In addition, there are a few other circumstances that may allow you to deduct a portion of your insurance premium. If you are insuring more than one person, such as your spouse and/or children, your premium can be greater than the premiums of the primary policy. If you are insuring your home with the same insurance company, then your insurance company may allow you to deduct a percentage of your home's value if your house is in a particularly good neighborhood. If you have a good driving record and spend a small amount of time outside of your home, your premium can be deducted. There are a few other situations that will allow you to make some deductions before taxes are due.
You will want to check with your agent to see what other ways can the health insurance premium be deducted. You may be surprised at all the options available to you. It is a good idea to gather as much information as possible before you start making decisions. This will help you make the best possible choices for your situation.