Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

What is an annual deductible for health insurance?

  • Deductibles represent part of the consumer share of the costs of insurance
  • Deductibles are out-of-of pocket expenses
  • Deductibles are the point where insurance payments start
  • High deductibles usually go with low premiums
  • Deductibles have an annual limit in qualified insurance plans


Deductibles are the thresholds that consumers must pass to get most insurance benefits in their plan. Obamacare created a group of wellness and prevention benefits that go to every consumer without added charges. Most benefits require that consumers first pay the deductible amount. The Affordable Care Act place an overall annual limit on deductibles by the limit on out-of-pocket expenses.

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Effects of Overall Limits

Once past the overall and plan limits, then the insurance must cover all of the essential benefit with no further cost to the customer during the insurance cycle. When purchasing insurance, comparison shopping can help find the best value for the price. Costs of insurance can include high rates of consumer charges for services outside of the network.

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Obamacare High deductible plans

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Obamacare offers high deductible plans with low premiums. They are among the most popular plans and most recommended plans. The federal government considers a plan with individual deductibles of $3,600 for individuals or $7,200 for family as high deductibles. Depending on income, these plans can get cost reduction assistance.

Deductibles in 2017

The federal government sets deductible limits for each calendar year.

High deductible plans work with health savings accounts to provide funds to pay deductibles and other out-of-pocket expenses.

In 2017, the below-listed items set the deductible limits for an individual and for a family. These amounts are before marketplace subsidies.

  • The maximum out-of-pocket expense for an individual plan is $7,150.00
  • The maximum out-of-pocket expense for a family plan is $14,300.00
  • The maximum deductible amount for an individual plan is $7,150.00
  • The maximum deductible for a family plan is $14,300.00

Health Savings Accounts

These policies can work with health savings accounts to provide a hedge against deductibles and it of pocket costs. If one does not need the funds for health expenses, then the funds rollover to the next cycle. Eventually one can claim the deposits and amounts earned as income.

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Tax Bonus from the HSA

The HSA can provide a long-term financial asset for policyholders. It offers immediate tax savings by reducing taxable income. This leaves a tax-advantaged savings account, interest and investment growth, and a financial asset. Depositors also avoids taxation on the deposited amounts until one claims it as income.

Health Savings Accounts 2017 standards

The minimum deductible eligible for HSA in 2017 is $1,300 and 2,600 for family. The maximum contribution to the HSA is $3,400 for an individual and $6,750 for a family. In addition, users that are age 55 or older can add an additional $1,000 per single person or $1,000 for a family.

Deductibles and the Four Types of Insurance

The Obamacare Marketplace offers four types of plans. The government groups them by actuarial value and uses metal names to link those with similar values. The managed care approaches and deductible levels vary by significant amounts among the metal bands. Each metal band offers lower and higher deductible options.

  • Platinum has low deductibles and high premiums. Insurance pays about ninety percent of the benefits and leaves ten percent for the consumer.
  • Gold plans have high premiums and low deductibles. They cover about 80 percent of benefit with insurance payments and leave twenty percent for the consumer.
  • Silver level plans have high premiums and moderately high deductibles; these plans cover about 7 percent of benefits.
  • Bronze offers high deductibles in a trade-off for low monthly premiums. Sometimes considered ideal for healthy young consumers, the low costs in premiums pair with the full serving of no costs benefits like checkups, health screenings, vaccinations, tests, and laboratory work.

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Managed Care and Deductibles

The form of the managed care organization affects the way deductibles impact the consumer.

Once the policyholder reaches the limit of deductibles in the plan, the insurance company must pay the covered essential benefit in full with no further coinsurance.

  • HMO stands for health maintenance organization. They do not use outside resources and keep deductibles low.
  • PPO or preferred provider organization permits the use of outside resources and charges the consumer more for that usage. They don’t count outside network deductibles towards the annual threshold or limit.
  • HMOPOS is a form that permits outside referrals and insurance coverage of outside referrals. Consumer payments for outside resources may not count against the annual deductible threshold or limit.
  • EPO is the exclusive provider network. These small networks only use network resources. This style ensures lower deductibles and out-of-pocket costs
  • PFFS is the private fee-for-service approach. It keeps deductibles relatively low and predictable because of the fee agreements.

The PPO and Deductibles for Outside Resources

Preferred Provider Organizations permit patients to use outside resources without a referral. The PPO does not pay as much when users go to non-network doctors and specialists than it does when users go to network doctors. There is another less obvious difference, the expenses for out-of-network doctors does not count towards the plan deductible.

Some Expenses do not Count

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This is an important point when trying to minimize out-of-pocket expense and reduce the impact of deductibles. Going outside of the network has a cost in higher consumer payment and in effect raising the deductible threshold.

When deciding between an HMO and a PPO organization plan, one should keep in mind that the freedom to choose outside resources is also a choice between lower or higher levels of deductibles.

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The Annual Deductible Opens Insurance Payments

The annual deductible is the on-switch for insurance-paid benefits. Health insurance policies set deductibles, and consumers must pay them before the insurance company pays its agreed share of benefits. When looking at the costs of health insurance, the premium and the deductible represent the minimum amounts the consumer must pay to get full benefits.

Shopping for the Best Fit

Obamacare brought in a lot of prevention and wellness benefits that do not require additional costs to consumers. They do not depend on reaching the deductible threshold.

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Comparison shopping is a great way to find the right level of deductibles for an individual’s medical needs and preference. Deductibles are the points for insurance companies to begin paying their shares of the contracts. They can be relatively high or low depending on the premiums.