Health Insurance

No-Deductible Health Insurance: What You Need to Know

No-Deductible Health Insurance

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No-deductible health insurance policies are health care plans with a deductible of zero that allow coinsurance and copay benefits to begin immediately. These plans may be a good fit if you are expecting high medical expenses during the policy year. Zero-deductible health insurance typically costs more to purchase, but it allows you to avoid some out-of-pocket expenses and may help you save money on total annual expenses.

What is a no-deductible health insurance plan?

A policy with no insurance deductible means that you get the full cost-sharing benefits of your plan immediately. You won't need to pay a certain amount out of pocket before the insurance company starts paying for covered medical services.

For example, if you had a covered medical procedure that cost $2,500, a no-deductible plan would mean the insurance company would pay their full rate for the procedure starting from day one of your policy. If you had the same medical procedure and your insurance plan had a $1,000 deductible, you would pay the first $1,000 of the cost before the insurer would contribute to the cost.

How does a no-deductible plan work?

The biggest difference between zero-deductible health insurance and other types of health insurance is when the insurer starts paying for covered medical services. With a no-deductible plan, cost sharing starts right away, but with other plans, cost sharing starts after you pay out of pocket up to the amount of your deductible. This timing can affect the total cost that you'll pay each year for care.

The structure of the health insurance plan will be similar to the structure of plans that do have deductibles, and there will still be some out-of-pocket costs and other standards. Here are the basics of how no-deductible plans work:

  • High monthly rates: No-deductible plans will have higher monthly premiums, but the full cost-sharing benefits will kick in on day one.
  • Payments for health care: You're also responsible for the cost of copayments or coinsurance, which is the portion you pay for services like visiting your doctor. There's also an out-of-pocket maximum, which is an annual cap on what you spend for in-network copays and coinsurance.
  • Policy exclusions: Even with a no-deductible plan, you could still be fully responsible for out-of-network care or uncovered health care services. Check your plan carefully for any exclusions and specifically the type of provider network for that policy.

What should you look out for when choosing no-deductible health insurance?

Some no-deductible plans are offset with high copays. If the monthly rate for a no-deductible plan seems too good to be true, look for potential downsides, such as a very high cost for each doctor's visit or a limited number of providers with in-network rates.

What metal tier has no-deductible plans?

When buying a policy through the health insurance marketplace, no-deductible plans can be found in all metal tiers, including Bronze, Silver, Gold and Platinum.

The general rule of thumb is that Gold and Platinum plans have lower deductibles than Silver or Bronze plans. However, we have recently seen new plans added in some locations, including Bronze and Silver policies with zero deductible. These plans are categorized in a lower tier because of a different aspect of coverage, such as a high out-of-pocket maximum, a limited network, high coinsurance or something else.

For example, when comparing select policies for no-deductible health insurance in Texas, the copay for an in-network X-ray is $70 with a Gold plan, $80 with a Silver plan and $140 with a Bronze plan.

What should you consider when choosing insurance without a deductible?

No-deductible health insurance plans are generally a great fit for individuals that have high expected medical costs for the year. However, they're usually not the cheapest health insurance plans on the market. Below we have outlined some factors to consider and to help you decide if a no-deductible plan is the best option for you:

  1. Expected medical costs: Ask yourself how much health care you expect to need in the upcoming year. Those who are older, those who are high-risk or those who have ongoing medical problems may benefit from a no-deductible plan because the insurer will immediately start paying for covered medical services. Keep in mind that most plans offer full coverage of preventive care whether or not your plan has a deductible.
  2. Impact on finances: Choosing a no-deductible plan means signing up for a policy with higher monthly costs, but you'll be protected from some large medical bills and out-of-pocket expenses. In contrast, high-deductible plans can help you lower your monthly bills, but major medical problems could result in large out-of-pocket expenses.
  3. Risk and predictability: Plans without a deductible generally make your health care costs more predictable. You'll pay a fixed amount for monthly premiums and copayments, which can help you reduce concerns about unexpected medical bills.

What's the average cost of health insurance with no deductible?

In 2021, monthly costs average $594 to $709 per month for no-deductible and low-deductible plans. Annually, this would total $7,128 to $8,508 in premiums paid for these insurance plans. However, your exact cost will depend on your circumstances and the health insurer you choose.

Comparing cost scenarios for no-deductible insurance

When comparing health insurance plans, remember that the deductible amount on your policy can affect the total amount you pay for health care each year. This is especially important when comparing no-deductible health plans to other types of health insurance.

To explore how insurance without a deductible can impact what you pay for health care, let's look at two sample scenarios — one where the person needed an expensive medical treatment, and the other with a person who had minimal health care needs.

The calculations show how no-deductible plans are better suited for those who have high medical expenses.

Scenario: Significant health care needs

No-deductible plan
High-deductible plan
Annual cost of premiums$7,800$4,632
Payments made toward deductible for health care services$0$6,500
Copays for doctor appointments (five visits at $25 each)$125$125
Total annual cost$7,925 (Savings of $3,332)$11,257

In a situation where you expect to need significant medical care or costly procedures, paying more in monthly premiums can help you lower your total costs.

In the scenario above, the individual with the no-deductible plan is paying $650 per month for health insurance, which totals $7,800 per year. They don't need to pay anything toward a deductible before their benefits kick in. However, they'll still pay standard copays or coinsurance for doctor visits or treatments. This puts the annual cost for health care at less than $8,000 with a no-deductible plan.

If a person with the same circumstances had a high-deductible plan, their total annual costs for health care would be more than $11,000. That includes monthly bills of $386 and an additional $6,500 for covered services before meeting the deductible.

Choosing the no-deductible plan would save the person in this situation $3,332.

In the second example, below, you'll see how the calculations differ if the person does not need major health care services. In this case, choosing a no-deductible plan would be overpaying.

Scenario: Low health care needs

No-deductible plan
High-deductible plan
Annual cost of premiums$7,800$4,632
Payments made toward deductible for health care services$0$0
Copays for doctor appointments (five visits at $25 each)$125$125
Total annual cost$7,925$4,757 (Savings of $3,168)

Because this individual does not have high medical costs, paying $650 per month for no-deductible health insurance would not be worth it. They would be paying the high upfront costs of premiums without using the benefits of lower out-of-pocket costs. In this situation, the individual would save $3,168 by choosing a high-deductible plan that costs $386 per month.

Are no-deductible health insurance plans popular?

Because of the high monthly costs, insurance plans without a deductible are less popular than other plans that have lower monthly costs. Only about 17% of the national workforce has health insurance with zero deductible.

In comparison, high-deductible plans are much more common, and 51% of the population are enrolled in plans with deductibles higher than $1,400 for individuals or $2,800 for families.

High-deductible plans are even more common for those who purchase health insurance through the individual marketplace. However, the attractiveness of the low monthly payments for these plans could leave some people underinsured and unprotected from major health expenses.

Can you get short-term health insurance with no deductible?

You can find short-term health insurance plans with low deductibles, but it's rare that you would find zero-deductible policies because of how this type of insurance coverage is structured.

The deductible amounts for short-term health insurance are generally higher than those of traditional health insurance plans because the focus of short-term plans is filling any gaps in coverage, such as when changing jobs or before open enrollment. Because they're not designed for long-term coverage, some short-term health insurance plans can have deductibles as high as $10,000.

Our 2021 pick for the best low-deductible short-term health insurance company is Pivot Health. This insurer offers one of the lowest deductibles on the market, starting at $1,000.

Is a no-deductible insurance plan right for you?

Health insurance with zero deductible can be a great choice if you expect high medical costs. By paying the higher monthly rates for a no-deductible plan, you could save money in the long run if you expect you'll need significant health care services in the coming year, such as expensive procedures or recurring treatments.

No-deductible plans are not right for everyone because there's a trade-off in costs. Generally, the lower the deductible, the higher the monthly cost for the plan. That's why zero-deductible plans can be the most expensive policies available. Conversely, the insurance plans with the lowest monthly costs usually have high deductibles.

Frequently asked questions

When is it best to have a no-deductible health insurance plan?

Health insurance with zero deductible or a low deductible is the best option if you expect to need major medical services during the coverage period. Even though these plans are usually more expensive to purchase, you could pay less overall because the insurer's cost-sharing benefits will kick in immediately.

Is a zero-deductible plan good?

A plan without a deductible usually provides good coverage and is a smart choice for those who expect to need expensive medical care or ongoing medical treatment. Choosing health insurance with no deductible usually means paying higher monthly costs. However, you could pay less overall because the cost-sharing benefits from the insurer will start right away.

What does "no charge after deductible" mean?

For policies with a set deductible amount, the consumer will pay out of pocket for their health care up until the total amount spent reaches the deductible amount. After this threshold amount is reached, the insurer will pay the remaining cost of covered medical services for the rest of the year. For example, if you have a $1,000 deductible, you could pay the first $1,000 of a $5,000 medical bill. The insurer would pay the remaining $4,000.

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