The IRS Deductions Blog

Archive for April, 2010

Question: I accidently backed into a car, but the owner doesnt want me to turn it in to my insurance?

She doesnt have car insurance and is scared she’ll get into trouble. Its at least 500 worth of damage. Do i have to pay her out of pocket? I pay insurance for a reason!!! My deductible is only 100, and i dont feel i should pay anymore than that.

Answer: Your deductible is for damage to your own vehicle. For damage to other vehicles you most likely do not have a deductible. Therefore, your insurance co will pay for the full amount of damage to her car with no out of pocket costs to you. But when your insurance renews, it will most likely go up because of your accident.

A site I’ve used to compare quotes in the past …

http://www.safelinked.info/go.php?link=insurance

Hope that helps.

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Question: How does a medical insurance deductible work?

I’m a little confused- I’m looking up health insurance plans (I haven’t been to a doctor since 1997) and I’m not sure I understand deductibles. Many plans say they won’t pay for medical costs until you pay the deductible, say for example $5000. Does that mean you have to send $5000 all at once to the insurance company before you can start using your medical benefits (dr.office visits, ER visits, etc.)? If I had that kind of money, I wouldn’t be looking for health insurance, I’d just buy the healthcare upfront, lol.

Answer: Depending on the plan, you may only have to pay an office visit copay. But before the insurance will pay anything toward the doctor’s visit, your deductible will have to be met.

Here’s how it works:
Your doctor will bill the insurance and the insurance will deduct their discount that they have if the doctor is in-network. What is left over will be applied towards your deductible and you will pay the doctor that amount.
The doctor’s visit is $100
The insurance takes their discount (say 20%) – $ 20

Which leaves a balance of $80. That amount is applied toward your deductible and that is the amount the doctor bills you. You pay the doctor, not your insurance.

This process will continue for all other services provided and you will be billed for them until you meet the deductible of $5000. At which point, the insurance will begin to pay their portion (could be 100% or maybe 80/20 depending on the policy).

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