Tip 212- Embedded Versus Aggregate Deductibles

Health plans covering two or more people begin to pay claims after a deductible has been satisfied. But your out of pocket exposure may be quite different depending on whether the family deductible is “embedded” or “aggregate.”

Let’s look at a family of three covered by a health plan with a $4,000 deductible. With an “embedded” plan, after any one individual incurs $4,000 of claims, the insurance starts paying at the coinsurance level, which might be 80, 90 or even 100%.

With a $4,000 “aggregate” deductible – usually associated with HSA plans – coverage doesn’t kick in until $8,000 has been spent, either by one person or the family in the aggregate.

This distinction comes to mind because HHS issued a ruling a few days ago saying that starting in 2016, the ACA annual out of pocket limit per person ($6,850) must apply to all plan designs.

Pending a reversal in this new rule, plans with aggregate deductibles in excess of $6,850 will need to be amended and, re-priced.