Deductible

A deductible is your share of costs before insurance helps. Choosing the right deductible is a balancing act between monthly premiums and potential out-of-pocket expenses.

How Deductibles Work:

Example: $2,000 Health Insurance Deductible

• Doctor visit ($150): You pay $150 (building toward deductible)
• ER visit ($3,000): You pay first $2,000, insurance pays remaining $1,000
• After you've paid $2,000 total this year, insurance covers future costs (minus copays/coinsurance)

Common Deductible Types:

1. Health Insurance:

• Individual: $1,500-$7,000
• Family: $3,000-$14,000
• High-deductible health plans (HDHP) qualify for HSAs

2. Auto Insurance:

• Collision: $500-$2,000 (damage to your car)
• Comprehensive: $250-$1,000 (theft, weather, vandalism)

3. Homeowners Insurance:

• Standard: $500-$2,500
• Hurricane/wind: Often 2-5% of home value

The Premium Trade-Off:

High Deductible ($2,000):

• ✅ Lower monthly premium (save $100-200/month)
• ❌ Higher risk if you get sick/injured
• Best for: Healthy people with emergency savings

Low Deductible ($500):

• ✅ Less out-of-pocket when you need care
• ❌ Higher monthly premium ($200+ more/month)
• Best for: Chronic conditions, frequent healthcare use

The Math:

High deductible saves $1,500/year in premiums but risks $1,500 more in costs. Break-even: If you expect 1+ major medical event, low deductible wins. If healthy, high deductible + HSA is smarter.

Pro Strategy: High deductible + save the premium difference in an emergency fund = best of both worlds.