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.

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.



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