About Integrated Deductibles

by Steve Lander

Some health insurance plans cover medical and prescription drugs. When they do, sometimes the two types of coverage have different limits and requirements. An integrated deductible bridges the two insurance types, letting money spent on either reduce the overall deductible. It can also apply to other types of medical insurance.

Understanding Deductibles

Many insurance plans are set up with deductibles. A deductible is an amount that you have to pay before your insurance starts paying expenses. For example, if you get a $2,000 bill for a procedure and your insurance has a $500 deductible, you will pay $500 and, barring any other limitations, your insurance will pay $1,500. Insurers can also apply deductibles to your prescription drug coverage. For instance, if your insurance has a $500 deductible for prescription drugs and you take a name-brand drug that costs $161 per month, you will have to pay for your first three months' worth of your drug out of pocket, and your insurer will start paying after you pay the first $17 of your drug's cost in the fourth month. That way, you will have paid $500.

Integrated Deductibles

With an integrated deductible, your policy just has a single deductible that applies to everything. Without one, even if you hit your medical deductible, you'd still also have to pay your prescription deductible separately. When you have an integrated deductible, your insurance starts paying once you've taken that amount out of pocket. For example, if you have a $500 integrated deductible for both health care and prescription drug insurance, and you spend $500 on hospital bills, your insurance will start kicking in for any additional drug or hospital expenses. It will also start kicking in if you spend $500 on prescription drugs, or $200 on drugs and $300 on medical care, or just about any other combination. Integrated deductibles don't have to be between health and drug insurance. They could be shared between a medical policy and another type of additional or supplementary coverage.

When Integrated Deductibles Save

An integrated deductible can be a benefit if it is lower than your combined deductibles will be, and your spending between the two is relatively close to what their deductibles would have been or more. For instance, if you have a $500 deductible for prescriptions and a $1,000 deductible for health care, and you spend $900 and $1,700 on each, respectively, your out-of-pocket cost will be $1,500 and your insurer will kick in $1,100 -- $400 towards your drugs and $700 towards your hospital costs. If instead you have a $1,000 integrated deductible, you'll pay $1,000 and your insurer will pay $1,600.

When Integrated Deductibles Cost

An integrated deductible isn't always a net benefit. If you spend most of your money in one area but spend very little in the other, it's possible that you could spend more with an integrated deductible. For instance, if you have $200 in health care expenses and $2,100 in prescription drug expenses, and a $1,000 integrated deductible, you'd spend $1,000 and your insurer would pay $1,300. If you had a $500 prescription deductible and a $1,000 health care deductible, though, you'd only spend $700. This happens because you pay the $200 in health care, since it is below your deductible, and you spend $500 on your prescriptions to meet your deductible, leaving your insurer to pay the other $1,600 in drug costs for you.

About the Author

Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.

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