Vanishing deductible benefits are not for car insurance policies only. Health insurance providers are also offering policies with a deductible that decreases over time when the chosen limit has not been reached by the insured(s).
This is being done in an effort to make older health insurance polices more attractive and to retain healthy customers with the added benefit of lower out-of-pocket expenses.
The two most prominent providers offering this new benefit are Anthem Blue Cross Blue Shield and United Healthcare, but others are sure to follow. These two carriers always have the option of reducing or changing this benefit as it is not built into the policy for its lifetime.
It is no secret that many healthy consumers reprice their health insurance each year in hopes of locking in lower premiums. If the deductible has been reduced by 20-50% however, then the lesser amount will need to factor into the search for a new policy.
In order to obtain an apples to apples premium comparison, the insured will need to compare matching deductibles. If their current plan has been in force long enough for the deductible to decrease, then a matching number would need to be chosen with the new carrier.
Like all insurance policies, premiums will need to be weighed against the potential for out-of-pocket expenses. Most consumers will usually put more weight on their premium payments, but this new metric may prevent some rapid policy changes.
In a nutshell, policy deductibles will decrease by a predetermined percentage each year so long as the insured has not reached the allotted amount. In most cases, the maximum credit will be half of the chosen deductible.
If for instance, you chose a plan with a $5,000 deductible, then the maximum credit that could be earned over a three years time would be $2,500. Should you reach your deductible after three years, then the insurance company would credit you (or a family member) with $2,500 for not having reached your deductible in the past.
Insurance companies have different means of crediting the allotted amount, but it is a nice feature that rewards good health and frugal shopping for medical related expenses.
This benefit is simply designed to incentivize good health while retaining customers. The plan is free and available for those enrolled in traditional plans with a $2,500 deductible and those on their Lumenos HSA plans with a $3,000 or greater amount.
Each year that the insured does not reach their deductible, even if it’s only by $1, his or her plan’s deductible will decrease by 20% in the following year – up to a maximum of 50%. By year three, the deductible will be halved.
If the deductible is reached, Anthem cuts a check to the insured for the qualifying amount and the program starts over. Thus, the incentive to change policies after a couple of years is less. And consumers who don’t often meet their deductible may shop for less expensive health care providers to make sure they qualify for this credit in close circumstances. See their flyer here.
United Healthcare offers this benefit for all of their deductible choices. The credit cannot reduce a health savings account deductible below its required limit by law.
Unlike Anthem, they do not cut a check to the recipient, rather the plan credits 20% reduction each year, up to a maximum of 50%, for the insured. With either company, your maximum reduction can be 50% after only three years.
In essence, UHC is encouraging consumers to purchase more affordable plans with higher deductibles. Someone who chooses a very inexpensive plan with a $10,000 deductible can have that number to $5,000 in three years assuming reasonably good health.
This benefit might also affect when the insured chooses to have an elective surgery or procedure. It could save them thousands simply by waiting until their next policy anniversary if they are in nor harm by doing so.
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