Aggregate vs. Embedded Deductible – What is the Difference?

When you are deciding on a health insurance plan to buy, it is vitally important to have an understanding of the plan options available to you and your family.  One of those options is your deductible.  The deductible is the amount of money you will pay out of pocket before the insurance company begins to make any payments.  In general, a medical insurance deductible works the same way as the deductible for your car or home.  When there is a claim, you pay first, and the insurance company pays second.  If you have a larger deductible, you have a smaller premium.

The deductible is the amount of money you will pay out of pocket before the insurance company begins to make any payments.

Individual vs. Family Deductible

With health insurance, though, there is a wrinkle.  It is called the family deductible.  Most insurance plans will have a deductible for each individual and a second deductible for the family.  Once a family reaches that family deductible the plan will begin to pay all or some of a claim.  How that family deductible is calculated and applied is what causes the difference between an embedded deductible and an aggregate deductible.  Knowing which kind of deductible your plan has can save a lot of headaches and help you plan for medical services.

What is an Embedded Deductible?

An embedded deductible is when the plan begins to make payments as soon as one member of the family has reached the individual deductible limit.  For example, if the individual deductible is $1,000 and the family deductible is $3,000 and one member of your family has an orthopedic procedure that costs $5,000, your family will be responsible for $1,000 and the insurance company will be responsible for $4,000 (assuming no coinsurance, which will be the assumption throughout this article).  There will also be $2,000 left over in the family deductible, so if someone else in your family needs health care services, you will be paying a deductible for those needs.

What is an Aggregate Deductible?

With an aggregate family deductible, your family will be paying the deductible until the entire family deductible is collected.  This kind of deductible can be because of medical care to one person or the entire family.

For example, lets say your family of 5 has an aggregate deductible of $3,000 and one member of your family has that same $5,000 procedure.  Your family will be responsible for $3,000, and the insurance company will pick up $2,000.  Your deductible will be satisfied.

Now, lets say that you have a procedure that costs $1,200.  You will be responsible for the entire $1,200, and $1,800 worth of deductible will be left to be paid.  Next, your spouse has a procedure that costs $1,500.  Again, you will be responsible for the entire $1,500, and $300 worth of deductible will be left to be paid.  Later, your child has a procedure that cost $6,000.  You will only be responsible for $300 of the deductible, and the insurance company will pay for the rest.  If anyone else in your family has medical services in the year that are subject to the deductible, you will not pay anything since your family deductible has been met.

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How To Know Which Deductible You Have

If you are not sure if you have an aggregate or embedded deductible, call your insurance plan’s customer service line, ask your benefits representative at work if you are on an employer plan, or check out your Summary of Benefits and Coverage.

You can also lower your out-of-pocket costs by enrolling in a telemedicine program, where you can talk to a doctor anywhere, anytime, 24/7. These calls are usually at a much lower cost than a visit to your doctor, especially if you are on an HSA-eligible plan.

Once you know if you have an embedded deductible or an aggregate deductible you can more easily plan your purchase of a health insurance plan and the payments of health care services.

5 thoughts on “Aggregate vs. Embedded Deductible – What is the Difference?

  1. If one is single, it sounds like it would be better to go with a plah which has an embedded deductible.

    In the example of the aggregate deductible you cited where a family has a $3000 aggregate deductible, the single person would have to pay the full $3000 before coverage would begin. As oppose to an embed deductible which is broken down to an amount for “you only” and another amount for “all other coverage levels”. Am I understanding this correctly?


  2. Evelyn, in your case, the family deductible would not apply. So you would just need to hit the individual deductible.

  3. This is really confusing even the carrier don’t understand their own policy. So let me ask this ,for a husband and wife, it would be better to have the Aggregated plane vs the embedded plan.. The husband has some health issues I do not.. once a year check up and maybe a boo boo now and then. Would that be correcr?

  4. Good explanation!
    Note that for a married couple with no children to be covered, enrolling in a plan with an aggregate deductible may be a mistake. I’m looking at a plan with $2500 deductible per person and $5000 per family. If we both enroll in this plan the aggregate $5000 will apply even if only one of us uses the insurance. A solution may be for each of us to each enroll in slightly different plans! A similar plan has aggregate deductibles of $1800 / $3600 and costs only $46 more per month. If we split up that way we will have deductibles of $2500 and $1800 each, and the higher amounts ($5000 and $3600) won’t apply to either of us.

  5. OK, my father is on Medicare and his secondary is from the company he retired from. Why have I seen before when looking at an EOB in the past (not sure about 2016 or 2017) it had said his FAMILY Deductible has not been satisfied? My mom is deceased (over 25 years now) and it’s just HIM on the insurances. Why would someone have a “family” deductible if it’s just them on the policy?

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