The Annual Deductible of a PPO Health Insurance Policy

Every PPO Plan has an annual deductible; however, not too many people know how this works.One of the basic details of a PPO policy is the annual deductible. You might even know the amount of the annual deductible on your policy. However, many people are surprised that they have to pay more for their health care than they thought they would. This is because the language that is used to describe the coverage is confusing and verbose.

So, just what is the Annual Deductible?

The amount of money that you have to pay out of pocket each plan year, before the insurance company starts paying for health care, is called your annual deductible.

On some policies there can be exceptions. These policies have what they call a co-pay amount for certain services, like doctor visits, preventive care and generic drugs. The co-pay amount is lower than the amount you would pay if you didn’t have coverage. You need to remember that these co-pay amounts do not count towards your annual deductible.

An Example of How the Annual Deductible Works:

Let’s say that your annual deductible is $1,000. That means that you are responsible for paying the first $1,000 worth of health expenses (excluding any co-pays) for that year. After that, the insurance company will help pay the costs as described in your policy. What this generally means is that you will be paying a percentage of the health bills and the insurance company will pay the rest. Remember, most policies contain an annual cap for out of pocket maximum

The two main types of annual deductible are; individual and family. Naturally, individual deductibles pertain to each person who is covered. Therefore, each member that is covered has to meet their annual deductible before the insurance company will start contributing.

And naturally the family deductibles pertain to all members of the family who are covered. Meeting the deductibles can generally be shared by two or more members of the family, according to the guidelines of your policy.

This brings us to one of the most common deductibles in the family format, this is the two member max.

The Two Member Max Clause:

What is a two member max? Well if your policy covers more than one person, there may be a footnote on your annual deduction that says “two member max. Basically what this means is that two people covered by the policy will have to meet the deductible before the insurance company will contribute to the health costs.

So if only one person on the policy meets the deductible, then the insurance company will pay towards their health care, But any future expenses for this person is not going to count towards any other member’s deductible amount. Each person has to meet their own deductible in order for the insurance company to start contributing to the health care cost.

According to the two member max, once two of the members have reached their deductible, the insurance company will contribute to all members health care cost.

In order to avoid any surprises, know all about your annual deductibles and how they work.

Last Modified April 7, 2010 @ 10:36 am
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