What Is an Aggregate Deductible & How Does It Work?

Aggregate Deductibles Still Exist, But with New Rules

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Your health insurance aggregate deductible affects the entire family. Image ©Elizabeth Pollard-Grayson/Moment Collection/Getty Images

An aggregate deductible refers to the system most high deductible health plans (HDHPs) have traditionally used for family deductibles. It works differently than the more common embedded deductibles used in non-HDHP health insurance.

Changes That Took Effect in 2016

Aggregate deductibles can still be used, and are described in detail below. But starting in 2016, all family health plans must have embedded out-of-pocket maximums that cannot exceed the individual out-of-pocket maximum for that year.

This applies to all non-grandfathered health plans, in the individual and group insurance markets.

So for example, in 2017 the individual out-of-pocket maximum is $7,150. Regardless of how a plan structures its deductible, no single member of a family plan can be responsible for more than $7,150 in charges for covered expenses in 2017 (HHS has proposed increasing the individual out-of-pocket maximum to $7,350 in 2018).

So the days of plans having $10,000 aggregate deductibles are over. A plan could still have a $6,000 aggregate deductible, for example, since that's lower than the individual out-of-pocket maximum. And plans can still have family deductibles that are higher than the individual out-of-pocket maximum. But they could only be met if more than one family member were to have  claims, since a plan can no longer require one member of a family to meet an aggregate family deductible that exceeds the individual out-of-pocket maximum (set each year by HHS).

With that in mind, let's take a look at how aggregate deductibles work:

How Does an Aggregate Deductible Work?

With an aggregate family deductible, the health plan doesn’t begin paying for the health care expenses of anyone in the family until the entire family deductible has been met. Once the aggregate family deductible has been met, health insurance coverage kicks in for the entire family.

There are two ways the aggregate deductible can be met:

  1. As each member of the family uses and pays for health care services, the amount they pay out-of-pocket for those services is credited toward the family’s aggregate deductible. After several family members have paid deductible expenses, the combined total of those expenses reaches the aggregate deductible. The health plan then begins to pay the health care expenses of the entire family (either in full, or with the coinsurance split that applies to the plan after the deductible is met).
  2. One member of the family has high health care expenses. The amount he or she pays out-of-pocket for those expenses is large enough to meet the family’s aggregate deductible. The health plan then begins to pay the health care expenses of the entire family, even though only one family member has paid anything toward the aggregate deductible.

What Expenses Count Toward the Family Aggregate Deductible?

The only expenses your HDHP will count toward your aggregate deductible are expenses for covered health plan benefits.

For example, facelifts aren’t usually a covered health plan benefit. If you get a face lift, the money you pay for it won’t count toward your aggregate deductible.

Your health insurance company can’t credit any of your out-of-pocket medical expenses toward your deductible if it doesn’t know about them. Make sure you or your doctor file claims for each of your medical expenses, even if you know you must pay them yourself because you haven’t met your deductible yet. This is how your health insurance company knows how much you’ve paid toward your deductible.

What Expenses Are Exempt From the Aggregate Deductible?

In the United States, the Affordable Care Act requires that health plans pay for preventive health care services without requiring any form of cost-sharing. This means that your health insurance will pay for things like your flu shot, your kids’ immunizations, and your mammogram even if you haven’t paid your deductible yet.

How the Aggregate Deductible Works in 2016 and Beyond

Under the new rules that took effect in 2016, a health plan can't require any individual to pay a deductible that is higher than the federal limit for the out-of-pocket maximum for individual coverage, even if that person is covered under an aggregate family deductible. For 2017, the out-of-pocket maximum for an individual is limited to $7,150.

An example illustrates how this works: Let's say the aggregate deductible for your 2017 family plan is $12,000. Once any individual family member has paid $7,150 toward the aggregate deductible amount, coverage for that particular individual must kick in without requiring further cost-sharing like copays or coinsurance. This person's coverage kicks in because he or she has now reached the legal out-of-pocket limit for an individual. However, coverage for the other members of your family still won't kick in until the family's entire aggregate deductible has been met.

This adjustment to the rules became effective as soon as your health insurance plan renewed in 2016, and will continue to be the case going forward.

Updated by Louise Norris.

Sources:

Department of Health and Human Services, Patient Protection and Affordable Care Act, Proposed Notice of  Benefit and Payment Parameters for 2018.

Department of Health and Human Services, Final Notice of Benefit and Payment Parameters for 2016 (80 FR 10823). 

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