Many health insurance plans feature deductibles. A deductible is a dollar amount that you must pay before the health insurance company begins paying, minus copayments. Deductibles are usually features of Preferred Provider Organizations and may range greatly in dollar amount. Group health insurance, obtained through an employer or association, decides the deductible amount and the date the deductible will reset. Typically, deductibles reset on an annual basis.
If your group health insurance runs on a calendar year, the benefit plan is effective on January 1 and ends on December 31. Per the terms of the group health contract, the plan will start new each January 1. If the plan design features annual deductibles, the deductible will reset each January 1. Any plan limitations that are annual, such as number of doctor visits, therapy sessions or hospital days, may also reset each January 1.
Group health insurance plans may contract on a benefit year, not a calendar year. Depending on when your employer or association contracts with the insurance company, the benefit year may start at any specific date. The contract date is the effective date and is often the first of a particular month. Many group insurance plans begin on July 1, although it may be the first of any month. The deductible will reset on the first day of the benefit year. If the plan runs on a benefit year of July 1 to June 30, the annual deductible will reset each July 1.
If you do not participate in a group health insurance plan but have individual, or private, health insurance, the deductible reset date depends on your plan design. If you choose a plan with a deductible, the deductible will reset each year. If your plan runs month-to-month, the insurer will renew your plan each month and maintain your deductible with a reset at the 13-month mark. For example, if you select a plan with a start date of July 15, you must pay toward the deductible until July 14 of the next year. If you are still covered under the same plan, your deductible will reset on July 15.
Deductibles vary from none to several thousand dollars. The amount of the deductible plays a large role in the premium amount, the amount of the actual policy. The larger the deductible amount, the less expensive the policy. Health Maintenance Organizations do not feature deductibles. With group health insurance, the deductible amount is always factored into the underwriting of the policy. Your employer will decide the deductible amount for employees along with the date the deductible will reset.
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Francine Richards is a licensed multi-state insurance agent with years of human resources and insurance industry experience. Her work has appeared on Blue Cross Blue Shield websites and newsletters, the Houston Chronicle and The Nest. Richards holds a Bachelor of Arts in communications from the University of Maryland.