This is a great question and, luckily, has a fairly straightforward answer.
Embedded deductibles and non-embedded deductibles are terms used to describe how deductibles are applied in health insurance plans. Here’s an explanation of each:
- Embedded Deductible: In an embedded deductible plan, each individual covered under the policy has their own deductible that applies to their specific healthcare expenses. This means that if you have a family plan with multiple individuals covered, each person’s healthcare expenses are subject to their individual deductible. Once an individual meets their own deductible, the insurance plan begins covering a portion of their healthcare expenses, even if the overall family deductible has not been met.
For example, suppose you have a family health insurance plan with an embedded deductible of $1,000 per person and a maximum family deductible of $5,000. If one family member incurs $2,000 in healthcare expenses, that person would meet their individual $1,000 deductible, and the insurance plan would start covering a portion of their subsequent expenses. Other family members would still have to meet their own individual deductibles.
- Non-Embedded Deductible: In a non-embedded deductible plan, there is only one deductible that applies to the entire family or group covered under the policy. The deductible must be met collectively by all individuals covered before the insurance plan begins paying benefits for any individual’s healthcare expenses.
Using the same example as above, if you have a family health insurance plan with a non-embedded deductible of $5,000, the entire family must collectively incur $5,000 in healthcare expenses before the insurance plan starts covering any individual’s expenses, regardless of which family member incurs the expenses.
The main difference between embedded and non-embedded deductibles is how they are applied to individuals within a family or group. Embedded deductibles allow for separate deductibles for each individual, while non-embedded deductibles require the collective family or group deductible to be met before coverage kicks in for any individual. It’s important to review the terms of your specific health insurance plan to understand how deductibles are applied and how they impact your coverage.
The same principle applies to an out of pocket maximum. That said, some plans have embedded deductibles and non-embedded out of pocket maximums (or vice versa). So double-check your plan to ensure you understand the plan structure.
Hope this helps in your health insurance journey!
Sapper Insurance 