First, let\’s save some times for people who are just looking for coverage just for a single person. This benefits of an embedded deductible in certain California health insurance plans will not apply to you. By default, the embedded deductible deals with plans that have multiple family members on on policy. Two is good but 3 or more really shows a difference in how these deductible benefit you. So let\’s dig into the embedded deductible and where you can find it.

For years in the California health market, the mantra when it came to family deductibles (2 or more people) was \”two person max\”. This always eliccited confusion and a few questions. Many health plans on the market still have this set-up and in fact, it was the norm maybe just a few years ago. First, the deductible is the amount you will need to pay for core services before the plan starts to help usually in the form of a percentage (called co-insurance). What if you have a family of four and the deductible per person is $3K? Does that mean that you will need to pay $12K in deductibles first before the plan will then start to pay a percentage? In most cases, \”no\”. The person max means that you will pay the per for covered medical costs until two people meet their individual full deductible. As we would describe it, think of it as a horse race and the first two to meet the finish line (deductible amount) will then meet the deductible requirement for other family members covered on a family policy. That\’s literally the way we would describe it over the phone for 1000\’s (too many to recall) discussions on the finer points of health insurance benefits. So what\’s wrong with that?

In the above situation, what if one person meets their deductible and all the rest of the family members have expenses (even up to $2999 each) but never meets the deductible for the \”2nd\” person. Tough luck in most cases. You could have $11,997 of deductible in one year. With a larger family, it\’s pretty easy to rack up $1K of expenses in a just worse than normal year. One x-ray or MRI might get you there. It defeats the purpose of insurance to be staring at almost $12K of expenses (not to mention the co-insurance up to max out of pocket portion) in one year, especially with the cost of health insurance in California today. There\’s another plan type where the problem was even more onerous…Health Savings Account or HSA type health plans in California.

With HSA\’s, you typically had a family deductible partially due to the original Federal design of what qualified for HSA special tax status. For example, if one person on an HSA plan had a $3K deductible, two or more would have a family deductible of $6K but it was cumulative. This means that if one family member had really big bills (which is more likely in a given year), that individual would need to meet the $6K family deductible. Ouch. The first HSA plan we remember coming out to address this were Blue Shield of California Spectrum Savings HSA plans. They started to implement \”embedded\” deductibles. This means that if you have a family of 3 (or any multiple greater than 1), each person essentially has a $3K deductible in our situation above. They went a step further in that the rest of the family members are all working up towards the remaining individual deductible to satisfy the family\’s requirement. For example, if one family meets their embedded deductible of $3K, once the other family members have covered expenses that meet $3K, the family deductible is met. Even if it\’s a little tough to follow all this health insurance minutea, trust us…this is the best of both worlds. With Blue Shield of California\’s recent July 1st, 2012 plan offering, their going full embedded deductible across all their plans which can only be thought us as pro-consumer even many people are unaware of this benefit to them. Hopefully it\’s a trend in the right direction going forward.

Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual California health market. affordable California health insurance

Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual and Small Group California health insurance market. http://www.calhealth.net

Author Bio: Dennis Jarvis is a licensed California health insurance agent with extensive knowledge of the Individual California health market. affordable California health insurance

Category: Finances
Keywords: california health insurance, california health quote,individual california health insurance quote