Have you combed through your health insurance plan to find the 2 deductible amounts? Yeah, me neither (I, for one, have other more exciting things to do…like clean toilets). But trust me, they’re both there!

As a refresher, the deductible is the amount you pay out of pocket before your insurance starts to help pay your medical bills. Most insurance plans have an “In-Network” deductible and an “Out-of-Network” deductible. The “Out-of-Network” deductible can be double the amount of the “In-Network” deductible. For instance…

$2,500 “In-Network” deductible 

$5,000 “Out-of-Network” deductible

Why are there two?

As we’ve learned in a previous article, insurance companies work with some local providers (docs, hospitals, imaging centers, etc.) to negotiate lower prices. The providers (your doc) want to be in the insurance network because the insurance companies drive lots of patients to them. As a result, providers are willing to negotiate lower prices so you pay less (and once your deductible is met, your insurance company pays less). These providers are considered “In-Network.”

Your insurance company uses the “pain” of the additional “Out-of-Network” deductible to encourage you to stay “In-Network.” This keeps their costs down once you hit your deductible and they begin paying your bills. Also, your insurance company has made “deals” with the provider and committed to get you into the provider’s office (vs. their competitor down the road). If you don’t use the “In-Network” providers, your insurance company won’t get the same “deal” next time in the negotiation process (and will have to raise their premiums). 

So, how does this affect you?

Let’s say you have a procedure this year and you decide to go with an  “Out-of-Network” provider for the procedure. You pay the non-negotiated price of $3,500 (instead of the $2,500 “In-Network” provider and price). Using our deductible amounts from earlier, you’re now left with…

$2,500 “In-Network” deductible 

$1,500 “Out-of-Network” deductible ($5,000 less the $3,500 price)

At this point, you paid $1,000 more for the procedure and you still have $2,500 to $4,000 left to pay out of pocket before your insurance company starts helping with your bills. 

Now, let’s say you made a different decision and chose an “In-Network” provider and paid the discounted “In-Network” $2,500 rate your insurance company has negotiated. Using our deductible amounts from earlier, you’re now left with….

$0 “In-Network” deductible ($2,500 deductible less $2,500 procedure)

$5,000 “Out-of-Network” deductible  

By using an “In-Network” provider, you not only saved $1,000 on the cost of the procedure, but you also met your “In-Network” deductible. If you continue to choose “In-Network” providers, your insurance company is helping to pay your costs.

Oh, did I mention the “Out-of-Pocket Maximum?” This is another tricky little number in your health insurance policy. Basically, once you hit that number, your insurance company begins paying 100% of your medical expenses. Guess what? There is an “In-Network Out-of-Pocket Maximum” and an “Out-of-Network Out-of-Pocket Maximum!” It might look like this…

$2,500 “In-Network” deductible and $5,000 “In-Network Out-of-Pocket Maximum” 

$5,000 “Out-of-Network” deductible and $10,000 “Out-of-Network Out-of-Pocket Maximum”

What that means is that you could potentially pay $15,000 out of your pocket before your insurance starts fully paying your medical bills. If you stay “In-Network,” that number drops significantly to $5,000 out of your pocket. Bottom line: you better really love that "Out-of-Network" provider because you not only pay more for their service, you pay more out of your own pocket before your insurance company starts helping with the bills. 

Now, it’s your turn! Have you used an “Out-of-Network” provider and wished you hadn’t? Do you always choose an “In-Network” provider?