How to deal with high health insurance deductions

In the new season, Netflix In the comedy-drama “Beef,” Ashley, played by Cailee Spaeny, is hospitalized for an ovarian cyst. The waiting room is bare, with gray decor and patients who look like they’ve been left there for years. Ashley’s partner Austin, played by Charles Melton, returns from the reception desk with bad news.

“That’s amazing. I can deduct $5,000?” Ashley says. “What if it’s cheaper? Can I get the difference?”

“It’s the opposite,” Austin replies.

That’s right. A deductible is the amount you must pay before health insurance coverage begins. But the second season of the Emmy-winning series, which began April 16, highlights a common confusion. According to a 2024 study by the National Association of Insurance Commissioners, just over one in four Gen Z adults could correctly identify the insurance term “deductible.”

“We argue that deductibles make people more prudent health care consumers by avoiding unnecessary medical care,” said Miriam Strauss, deputy director of the Center for Health Law and Policy at Georgetown Law’s O’Neill Institute.

“However, many consumers may not realize that if they enroll in a high-deductible plan, they could be facing thousands of dollars in medical bills,” Strauss said.

Research shows that out-of-pocket costs that people can’t afford can worsen health outcomes, Strauss added. For example, “among cancer patients, having high-deductible health insurance tends to be associated with worse overall survival,” she said.

In the 1990s and early 2000s, many health insurance plans didn’t even have deductibles, said Matthew Ray, associate director at KFF, a nonpartisan health policy research group. Things have changed now, with nearly 88 percent of workers with employer-sponsored insurance having a deductible, compared to just 55 percent in 2006, Ray said.

As medical services expanded and medical costs rose, employers and insurance companies turned to deductibles to curb utilization and reduce their own expenses. Ray said that from 2005 to 2020, “deductibles increased rapidly.” Growth has slowed recently, largely because employers have realized that higher costs may prevent them from fully achieving their plans, but further weakening of the labor market and increased cost pressures could put stability at risk, he added.

“The $5,000 deductible doesn’t surprise me at all,” Ray said.

Some Afforable Care Act Marketplace plans can have deductibles of more than $7,000, but most people pay less than that. The average deduction on the market in 2026 will be $2,912, compared to $1,881 in 2014.

Meanwhile, out-of-pocket costs for people with employer-sponsored insurance have increased by 17% over the past five years and 43% over the past 10 years, the KFF study found. Roughly one in five of these workers currently has a deductible of $3,000 or more on a single policy, Ray said.

“Even if it’s not $5,000, it puts a huge financial burden on people,” Ray said. “That’s a shock to your budget.”

Caitlin Donovan, senior director of the National Patient Advocacy Foundation, said there are several ways to calculate the deductible.

“It might be on your insurance card, it might be on your benefit description,” Donovan says. “If you have a patient portal, you should be able to log in and find it there and see how far along you are on your journey to that portal.”

If you still can’t find it, call your insurance company and ask, she added.

If you’re having trouble meeting your deductible, keep in mind that “reaching your deductible isn’t necessarily the goal,” says Katherine Hempstead, senior policy director at the Robert Wood Johnson Foundation.

Hempstead said that because of the safeguards spelled out in the ACA, certain preventive services from in-network providers should be covered for free, regardless of whether you meet your deductible. A list of protected treatments and tests can be found at Healthcare.gov. Examples include immunizations, lung cancer screenings, birth control, and typically annual physical exams.

If you’re young, healthy, and rarely use insurance, you may not need to meet your deductible, Donovan says.

But on the other hand, if you have a chronic illness or have high medical bills, you may want to max out your deductible at the beginning of the year so you can benefit later, she said. If possible, Donovan says, book the most expensive services, such as surgery, after your deductible is paid off and your coverage is fully activated.

High-deductible plans often come with health savings accounts, flexible spending accounts or medical reimbursement plans, he added. These three tax-advantaged accounts can make paying your medical bills a little bit easier.

“Sometimes you have to be a little crafty,” she says.

If you haven’t reached your deductible yet and are concerned about upfront costs, do your research before booking any services or tests, said Patricia Kelmer, senior director of health care campaigns at consumer advocacy group PIRG.

“Laboratory and imaging prices can fluctuate significantly,” Kelmer says. “You can usually find out the price upfront from your insurance company.”

He added that efforts will be made to avoid testing at hospitals as this can lead to incurring facility fees. If you’re offered a discount for paying for a service in cash, it may not count toward your deductible, Kelmer said.

It’s also wise to regularly check your progress toward paying your deductible, Kelmer says. These details can often be found on your insurance company’s portal.

“If your provider has not yet submitted your claim, there may be a delay,” she said. “If you recently received treatment, check to see if you received credit for what you paid out of pocket.”