The IRS Deductions Blog

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Question: Looking to purchase health insurance, but confused when it says 20% after deductible?

For example, If the deductible was $2,000 and I pay that when my coverage begins. So if I was planning to see a doctor and my coverage was 20% coinsurance after deductible, what does it mean? If you could give an easy example, it would be very helpful, thank you!

Answer: Until you pay in the whole amount of the deductible, you will be responsible for 100% of the doctor’s discounted charges. (Usually when they are a member of the HMO or PPO, they charge less than non-insured patients.) So, until you pay out of your pocket $2000, then the insurance company won’t pay anything. After there’s $2000 out of your pocket, then the insurance company will pay 80% of the discounted charges and you will have to pay 20%.

Look at an estimated year’s worth of your expenses. On this plan, add up your monthly premium, $2000, and an estimate of your doctor and hospital charges and take 20% of that. Divide by 12 to see what the real monthly cost is. The lower deductible may be a better coverage as long as the monthly premium is not so high it means your annual expenses are higher. Add it up and compare side by side.

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