SolveYourProblem eLearning Series:
Health Insurance: Your Questions Answered
What does everything mean & how to choose the right policy
( 18 pages )

Medical Coverage Deductibles

Deductibles can be handled in several different ways depending on your policy. One method might be on a per-cause deductible which applies to sickness or injury. Other policies may have a deductible known as all-cause which is sometimes called cumulative or calendar-year deductible.

If your policy is per-cause you will pay a single deductible for all expenses you incur for the same injury or illness. Your benefit period for each cause begins when deductible has been met for that injury or illness. This can sometime run as long as one or two years.

It is important to understand the per-cause stipulation. Let’s look at an example. If you are ill in May and then are injured in an accident in July those are two separate causes and deductibles must be met for each of them separately.

However, if your policy is based on an all-cause deductible, the expenses for various injuries or illnesses are accumulated to meet your deductible in one calendar year. Once that is met, the rest of your charges are paid for that calendar year.

Additionally, using the all-cause method there is usually carryover provision that allows you to carry over expenses from the last three months of one calendar year to the next.

If your policy covers the entire family, then a family deductible will apply rather than individual deductibles. In other words if a policy’s individual deductible is $200 a family deductible might be $400. This can be very advantageous because a six member family would only have to meet $400 rather than $1200 individually.

One other type of deductible could also be beneficial to a family and that is the common injury or illness provision. What this means is that if two or more family members are injured in a common accident or become sick from the same illness, only one deductible amount will be required.

The time during which benefits are paid is called a benefit period. These times are generally linked to the deductible as well as any inside or internal limits in the major medical policy.

Determining when a benefit must be paid can be done one of two different ways. The benefit period might begin either on the first day of an injury or illness or on the date that the insured meets the deductible and can extend up to two years. Or, the benefit period may cease at the end of a calendar year and begin again with a new deductible.

Benefit limitations placed on certain of the various coverages in a major medical policy are considered inside or internal limits. In other words, the policy may limit both room and board and number of days that will be paid. In this case, the period for hospital room and board will be whatever number of days that are specified. Other internal limits might be restrictions for convalescence, mental health, x-rays and similar items.

Your restoration of benefits is the time at which you can expect your benefits to resume after policy limits have been met. For instance, a lifetime level might be as much as $500,000 and an insured might use up half or more of that in a single year. This leaves only $250,000 left for the remainder of his life.

Some policies allow the maximum to be restored if the insured can prove that he is once again insurable. Other policies may have an automatic reset provision restoring a specified amount every January 1st.

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