by Jesse Hendon
What the hell us a deductible and why do I keep hearing about these things in the news? This is a question I kept hearing from friends around the time Obamacare was coming into place around 2009. We’ll go into specifics of individual coverage types in articles with health, auto, pet etc… However there are a few terms you should know and a few things you need to know about insurance. Now, what’s that deductible thing again?!
Deductible – this is the amount of money you have to pay before your coverage kicks in.
Most people are introduced to their deductible either when they’re at fault in a car accident or when they get their first doctor bill! When you choose your policy, you notice the prices are lower when the deductible is higher. This is because you are taking some of that first dollar risk yourself. You get a sick new ride, you stretched yourself out on a monthly payment for the loan and now you gotta get insurance. Well, let’s just save a few bucks and put that deductible up to a thousand, then BAM! You slam into that car in front of you and it definitely wasn’t because you were checking Snapchat! Well now you have to pay a thousand bucks before any other damages will be fixed. Remember to take into account what you can pay in an event like this and be realistic with yourself, because the bank of mom and dad may well be closed.
Co-Pay – amount you have to pay as a flat dollar for a procedure.
Co-insurance – amount you have to pay for a procedure as a percentage
I use these together because they are often confused. It’s important to know what your responsibilities are for procedures whether they’re for you, your pet or your sweet ride! The amount your responsible for will often be owed before any work is performed.
In network and out of network
Whether it’s a doctor for your body or a doctor for your car, you’ll want to use facilities and professionals that are in network with your insurance. This will save you a ton of money! If you have an affinity for certain doctors with health insurance, make sure they’re in network before you buy.
Maximum out of pocket responsibility. This is your ceiling on responsibility. Let’s say you get cancer. This is a disease that can cost hundreds of thousands to fix, however you are not Mark Zuckerberg and aren’t sitting on Facebook money. When you reach your MOOP, which you should pay attention to when buying your policy, you will pay no more bills for the year.
Where to buy and how to compare.
I’m a huge fan of using brokers. They typically get paid directly from insurance companies and can price shop the best plans based on your needs and budgets. What I’ve found to be even better are comparison tools online that allow you to customize your policy without concern that a salesperson gets a better commission from one company or another. Here are a few market places I’ve found to be very helpful. Full disclosure, I’m a shareholder on the pet comparison site.
For auto and life: policygenius.com
For pet: petinsurer.com
For health: ehealth.com
For life and health: selectquote.com