No-Deductible Health Insurance: What You Need to Know

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Written by
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Reviewed by
Farmers CSR for 4 Years
UPDATED: 2021-09-07T20:55:06.978Z
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Selecting the right type of healthcare plan can be a stressful process. Between the industry jargon and the sheer number of available options, you may have trouble determining which type of insurance is which, let alone deciding what overall healthcare plan is best for your health and financial situation.

For instance, did you know it’s possible to have a no-deductible health insurance plan? While most healthcare consumers don’t opt for this option, it could be the ideal plan for you.

But what does a zero-deductible plan entail? What are the benefits? Here’s what you need to know.

Before you dig in, if you want to see the best health insurance options for you, enter your ZIP code into our free health insurance comparison tool to view your options.

What is a health insurance deductible?

Before we can dive into the nitty-gritty of no-deductible plans, you have to know what a deductible is in the first place.

Per, it’s the set amount of money you need to pay out of pocket for covered healthcare services before your insurance plan kicks in. For instance, if you have a $3,000 annual deductible, you’ll need to pay that $3,000 out of pocket for covered services before your insurance provider begins to pay.

Once you hit the deductible point — it could be from a single trip to the doctor or several — the only covered services you have left to pay for the rest of the year may be a copayment or coinsurance.

That said, there are some cases where your plan may pay before you’ve met your deductible, including some services like a check-up for disease management programs. Certain preventative benefits will also be fully covered and some plans have separate deductibles for other services, such as prescriptions. Family plans often have an individual and a family deductible.

Deductibles can range from hundreds to tens of thousands of dollars. It depends on your insurance policy, health needs, and budget. In most cases, there’s an inverse relationship between deductibles and premiums. Plans with lower annual deductibles have higher monthly premiums.

What is no-deductible health insurance?

As the name suggests, with a zero-deductible plan, insurance cost-sharing begins immediately, whereas, with other plans, you must first hit the set deductible.

For example, let’s say you have a covered medical screening that costs $5,000. With a zero-deductible plan, the insurer would pay the full rate for the screening from the outset.

If that’s the case, then why doesn’t everyone get a no-deductible plan? In a word, it comes down to tradeoffs. Yes, you may not have a deductible, but you can expect to pay more in other areas, including:

  • Premiums – Generally speaking, the lower the deductible, the higher the monthly premium. So, you can expect to pay more every month. Other payments – In addition to a deductible, a covered healthcare service has other costs, such as:
    • Copay – A specific fee for a particular service or treatment.
    • Co-insurance – The percentage that insurance agrees to pay for a certain medical service.
    • Maximum out-of-pocket expenses – The most you have to pay in deductibles, copays, and coinsurance. Once this figure is hit, insurance covers 100% of the remaining costs.
  • Exclusions – No-deductible plans may be limited by the number of providers within the network. So, if you go out of network or undergo uncovered healthcare services, you may have to pay the entire bill.

Because of these factors, a zero-deductible health insurance plan is a better option for someone who expects to have high medical expenses each year or who requires several prescriptions.

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What does an individual no-deductible plan cover?

The specifics of what a plan does or doesn’t cover depends on the insurer and the plan itself. That said, every health insurance plan is expected to cover some basic treatments and services, though at differing levels and costs. Basic benefits may include:

  • Outpatient care – This refers to healthcare consultations, procedures, or other services that do not include an extended stay in the hospital or within a medical facility. Although the duration may vary, outpatient care doesn’t involve a night’s stay.
  • Hospitalization – Sometimes referred to as inpatient care, hospitalizations typically are more serious and require a patient to stay overnight. Maternity and newborn care are often grouped under this umbrella and can include labor, delivery, and prenatal services.
  • Emergency services – If a patient is experiencing severe illness or injury, healthcare coverage can include visits to trauma centers, hospital ERs, or specialty care services.
  • Lab tests – Laboratory tests help doctors detect, diagnose, or monitor diseases, diseases processes, or figure the proper course of treatment. This may include X-rays, Pet scans, urinalysis, blood tests, and more.
  • Prescription drugs – Some plans may have a separate deductible for prescriptions. That said, these are pharmaceutical medications prescribed to a patient by the doctor, and that legally require a medical prescription to be dispensed.
  • Preventative treatment – Checkups, screenings, and physicals are all aspects of maintaining health and proactively searching for potential health issues before they worsen.
  • Chronic disease management – Certain chronic diseases, such as diabetes, require regular screenings and maintenance to monitor the condition and combat its ability to negatively impact a patient’s health.

Why have a high deductible health insurance plan?

The type of plan best suited for you is largely contingent upon several factors, including your health, age, and financial situation.

Typically, young and healthy people prefer to have a high deductible plan. Such a person rarely goes to the doctor for anything besides a yearly checkup or an emergency medical experience. Since it’s a service they plan on using infrequently at most, paying a much lower monthly premium is more beneficial for their finances.

In this case, the healthcare consumer makes a financial risk calculation that figures there’s only a slight chance they’ll need to go to the doctor several times or pay for a medical service.

For instance, let’s say a fit 20-year-old man with clean health history has two plan options:

  • A plan with a monthly premium of $600 for a zero deductible plan
  • A plan with a monthly premium of $100 with a $5,000 deductible

As long as he has less than $6,200 of medical coverage, the second plan would likely be the more affordable option. And that doesn’t even account for the other potential costs or constraints of a zero-deductible plan. However, for an older person with preconditions who sees their doctor regularly, the first plan will likely be the better option.

Put simply, having a high deductible plan, or a zero deductible plan isn’t bad in and of itself. It just depends on the specifics of your health and finances. What works for one healthcare consumer may be inadequate for another, and vice versa.

To determine what’s ideal for your specific situation, you have to compare and contrast plans according to the annual cost of premiums, copays for doctor appointments, out-of-pocket maximums, and payments made toward the deductible.

Keep in mind that there are ways you can save on health insurance, including looking for discounts offered by your provider or using fitness trackers to save on health insurance.

Types of Individual Health Plans

There are several types of insurance plans a healthcare consumer can choose from. This is why it’s smart to shop around and review all of your options. Basic plans include:

  • Preferred Provider Organization (PPO) – A PPO offers healthcare consumers a network of healthcare providers to use for their medical care. The providers within the network agree to provide care to plan members at an agreed-upon rate. With this type of plan, you pay less for providers within the network and more for providers outside of the network.
  • Health Maintenance Organizations (HMO) – A HMO limits the healthcare coverage to care from doctors who work for or contract with an HMO. These often are more limited and regionally focused but provide cheaper rates. Additionally, they focus on providing prevention and wellness care to its members.
  • Point of Service Plan – A point of service plan combines elements of a PPO and an HMO. It uses a managed care foundation that offers lower medical costs in exchange for less choice. Like an HMO, policyholders have to select a primary care doctor from within the plan’s network. Like a PPO, out-of-network services are covered but at a higher rate.
  • Catastrophic coverage – One of the lowest cost options available, these are the most basic type of health insurance. They provide coverage against major injuries and illnesses but are limited to 3 basic visits per year up to the deductible. These types of plans are ideal for those with enough savings to cover most of their medical costs.

Find a Health Insurance Plan with Clearsurance

Having medical coverage is an important way you can maintain your long-term health. If you already suffer from chronic health issues or require several prescriptions, a no-deductible health plan may be right for you. But how do you find the best plan for your health and finances?

That’s where we come in. To see your options, simply enter your ZIP code into our free insurance quote comparison finder. Once you do, you’ll be able to compare and contrast the available healthcare plans in your area.

So, if you want to get the best plan at the most affordable rates, try it out for yourself!

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Photo by Hush Naidoo Jade Photography on Unsplash

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