No-deductible health insurance is a type of health insurance plan that does not require the policyholder to pay a deductible amount before their insurance begins to cover services.
No-deductible health insurance plans may also have lower copayments or coinsurance rates for medical services. This can make it more affordable for policyholders to access care without worrying about high out-of-pocket costs. Additionally, no-deductible plans are ACA-compliant, and can be purchased through the Health Insurance Marketplace and possibly your employer if they offer it.
Table of Contents
Why No-deductible Health Insurance May Be Worth Considering
No-deductible health insurance plans may be a good idea for some populations, such as those who expect to have significant medical expenses, like surgery or long-term care. However, remember that because there is zero deductible, the monthly premium for the plan will be higher than a standard policy.
Because of these higher upfront costs, no-deductible health insurance is not as popular as other types of coverage. As of 2022, less than a quarterde of health insurance plans do not have a deductible. In contrast, high-deductible plans, which come with lower premiums, are used by more than half of the population.
What is a Health Insurance Deductible?
Health insurance policies often include a deductible, an amount you pay for medical services before the insurer covers further expenses. For instance, you might pay $2,000 before the insurance covers the year’s remaining costs. Deductibles reset annually.
Even after meeting the deductible, you might face coinsurance and copays. An insurer might cover 80% post-deductible, leaving you with 20%. Plan details vary, so review them for specifics on coinsurance and copays. Additionally, plans have out-of-pocket maximums, capping what you pay for covered services, usually annually.
How Does No-deductible Health Insurance Work?
When you have a standard health insurance policy with a deductible, the insurance company pays benefits once you have met your deductible. A zero-deductible health insurance policy is the opposite. Since you have no deductible to pay, they will begin covering your benefits immediately.
Almost everything else about the plan will resemble a standard deductible health insurance policy. You may still have some other cost-sharing contributions to make in the form of copayments or coinsurance, depending on the structure of your policy.
For example, your insurance plan would kick in immediately if you have a health plan with no deductible and a surgery benefit. Your hospital bills, medicine, and recovery fees could all be covered. Remember, you may have coinsurance which commonly is 20%, so you will still have some out-of-pocket costs.
Who Is Eligible for No-deductible Health Insurance?
Because the ACA Marketplace offers no-deductible plans, you cannot be denied coverage due to a pre-existing condition. However, because the premiums may be higher than other plans, eligibility is largely dictated by having the means to pay comparably higher monthly costs.
People with high anticipated annual medical costs usually benefit from a health insurance plan with no deductible. Consider the following if a no-deductible plan sounds attractive to you:
- Will you have a lot of medical expenses over the next year such as surgery, physical rehab, etc?
- Are you pregnant?
- Do you have a chronic illness?
- Will you be able to comfortably afford both high monthly premiums and copays/coinsurance?
If any of these situations apply to you, the overall cost for a health plan with no deductible may be less than a standard policy with a deductible.
Always read through the benefits and make sure it is what you want. Some zero-deductible plans have very high hospital copays, which almost defeats the purpose. Others have limits on what they will cover, which could leave you with a high medical bill in an emergency. Many of the zero-deductible policies can be great if you anticipate needing expensive procedures done, or are taking expensive medications. Make sure you’re getting the one that is best for your situation.
What Do No-deductible Plans Cover?
Because these plans are ACA compliant, they are mandated to cover the same essential care categories as all other types of marketplace plans. These include:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care for children
However, individuals who expect to frequently use some specific services or have some conditions may find no-deductible plans a good choice. These may include the following:
- Chronic Diseases: Many Americans suffer from a chronic disease of some type. Whether this is diabetes, cancer, or a heart condition, it can mean ongoing medical expenses that can be financially taxing, especially if you have a high deductible.
- Prescriptions: As long as a doctor prescribes a particular medication, you will likely have coverage with a no-deductible health plan. However, remember that some plans may have their own deductible for prescriptions.
- Testing: Many lab tests your medical provider may order to help determine what is going on with your health are covered benefits. With no-deductible plans, you will not need to pay for blood tests, X-rays, urine tests, and CT scans outside of copays and coinsurance when applicable.
- Hospitalization: Hospitalizations will be covered if you need a procedure requiring an overnight stay. No-deductible coverage could be a good choice if you need frequent medical procedures that require extended stays in the hospital.
Short-Term Health Insurance Plans Without a Deductible
Short-Term health insurance plans can come with low deductibles, but no-deductible policies are rare due to the way these policies are structured.
Because short-term plans aim to fill any gaps in coverage, like when changing jobs or before open enrollment, their deductibles tend to be higher than traditional health insurance plans.
Since a short-term health insurance policy is not supposed to be a long-term solution, you can expect to see a deductible as high as $10,000.
Additionally, short-term health insurance plans are not ACA compliant and, therefore, can deny coverage based on pre-existing conditions such as a chronic illness or a pregnancy. Therefore, because no-deductible plans are most attractive to people more likely to use healthcare services, a short-term plan is probably not a good idea for these populations.
How Much Does No-deductible Health Insurance Cost?
While these plans may have higher premiums than other types of health insurance, one may realize cost savings over time depending on the specific plan and how often you use it. Here are a couple of the prospective costs one can expect:
No-Deductible Plans | High-Deductible Plans | |
|---|---|---|
Annual Premium Cost | $7,620 | $4,821 |
Annual Deductible | $0 | $1,500 |
Average Spent on Copays | $400 (Eight visits at $50/per) | $200 (Four Visits at $50/per) |
Remember that other costs, such as prescription drug coverage, will vary depending on the insurer and tier you select. For example, some insurers offer no-deductible plans that may keep a deductible specifically for drugs.
Further, prices may vary depending on what tier of coverage you select. Many healthcare plans offered by the Marketplace may come in Bronze, Silver, Gold, and Platinum editions. The higher-tiered plans (Platinum and Gold) offer more services and costs rolled into the premiums.
Out-of-Pocket Maximums
In 2023, the out-of-pocket limit for a Marketplace plan cannot be more than $7,500 for an individual and $15,000 for a family. Because no-deductible plans are offered through the marketplace, they too are subject to these limits.
An out-of-pocket maximum is the most a policyholder would have to pay in a given year for covered medical expenses. This includes deductibles, copayments, and coinsurance. Once the policyholder reaches the out-of-pocket maximum, the insurance plan will generally pay 100% of covered medical expenses for the rest of the year.
How To Get No-deductible Health Insurance
Getting a health insurance plan with no deductible is no different than purchasing any other type of plan through the marketplace. Take the following steps to get the healthcare you need:
- Check Your Eligibility and Enrollment Date: You may be eligible to purchase a plan through the marketplace if you are a U.S. citizen or legal resident and do not have access to affordable health insurance through an employer or government program. The ACA Marketplace has an annual open enrollment period from November 1st to December 15th. Keep in mind that qualifying events also give people an opportunity to sign up for coverage outside of open enrollment.
- Compare Plans and Prepare To Enroll: Because no-deductible health insurance may have different coverage nuances (such as prescription drugs), review the fine points of the available plans. It may also be a good time to gather your personal information and documentation, such as identification documents, social security numbers, birthdays, and income information.
- Apply For Coverage: During the open enrollment period, you can enroll online, by phone, or with the help of a licensed agent or navigator. At this point, you will formally select your plan and provide your documentation.
- Make your first premium payment: After your application is processed and your coverage is confirmed, you will receive information on how to make your first premium payment. Be sure to make your payment by the due date to avoid losing your coverage.
Should You Get No-deductible Health Insurance?
People with high anticipated annual medical costs usually benefit from no-deductible health insurance plans. The downside to these plans is that they are not always the most affordable upfront. If you are in the market for a new health insurance plan and are considering a no-deductible option, consider these things:
Advantages
- Potentially Lower Costs: Deductibles can be expensive, often over $1,000. That can be a lot to spend if you have a medical emergency. If you know you have higher expected medical costs over the next policy period, you could spend less out-of-pocket with a no-deductible plan.
- Predictability: Without a deductible, you know that your health insurance policy will pay benefits immediately, negating the possibility of an unexpectedly high hospital bill.
- Incentive To Get Medical Treatment: Many people will put off seeking medical treatment if they have a deductible. With a no-deductible plan, you may be more likely to seek care immediately, knowing it will be paid for.
Disadvantages
- Higher Premiums: Since the deductible is a portion of your healthcare costs that you are responsible for paying before your insurance kicks in, a plan with no deductible will typically have higher monthly premiums to compensate for the increased coverage.
- Limited Coverage: Some no-deductible plans may limit coverage for certain services, such as prescription drugs, mental health care, or preventative care.
- Limited Provider Network: Some of these plans may have a limited network of providers, limiting your options for receiving care.
- Out-of-Pocket Costs: Even with no deductible, you may still be responsible for copays, coinsurance, and other out-of-pocket costs, which can add up over time.
Zero-deductible fixed benefit plans may be a helpful supplement to a major medical or short-term policy where you need to meet a deductible before coverage starts. Sometimes, pairing a high-deductible medical plan with a fixed-benefit plan can offer comparable coverage to a lower deductible medical plan, but at a lower monthly cost.
Alternatives to No-deductible Coverage
If you’re not sure that no-deductible coverage may be right for you, there are other options. If you find yourself in that position, consider the following:
High deductible Health Insurance
A high deductible health insurance plan (HDHP) is a type of health insurance plan with a higher deductible or the amount you pay out-of-pocket before your insurance starts covering healthcare costs than traditional insurance plans. HDHPs generally have lower monthly premiums than traditional plans but require you to pay more out-of-pocket for healthcare expenses.
An HDHP may be more attractive if you’re in good health and do not want to pay the high premiums associated with a no-deductible plan. Additionally, HDHPs often have spending and tax advantages in the form of Health Savings Accounts (HSA). An HSA allows you to save money on a pre-tax basis to pay for healthcare expenses. No-deductible plans are not eligible for an HSA.
Point of Service (POS) Plans
A Point of Service (POS) healthcare plan combines elements of other popular healthcare plans, such as HMOs and PPOs, with some qualities of no-deductible insurance.
With a POS plan, you can receive care from in-network or out-of-network providers. If you choose to receive in-network care, there is no deductible for those services, though there are copays and coinsurance. POS plans may be an attractive alternative to no-deductible plans as the premiums are cheaper. However, they may still be more expensive than HMOs or PPOs.
Putting It All Together
No-deductible healthcare plans can provide lower-cost healthcare services for those who want to avoid unexpected healthcare expenses or expect they will require sustained medical care. They eliminate the need to pay some out-of-pocket costs before your insurance kicks in, allowing you to receive necessary healthcare services without worrying about the financial burden outside of coinsurance and copayments.
However, it’s important to keep in mind that no-deductible plans typically have higher monthly premiums and may not be the best option for everyone, especially if you’re younger and healthier. When selecting a health insurance plan, it’s important to consider your individual healthcare needs and budget to find the plan that’s right for you.