You have asked the question that confuses more consumers and insurance brokers than just about any other terminology in our industry. Usually this question comes up in the context of a high deductible health plan associated with a Health Savings Account (HSA). There are two types of deductibles offered with these plans; aggregate and embedded.
An aggregate deductible plan requires that more than one deductible be met before the plan's co-insurance and other coverage provisions come into effect. Usually two deductibles have to be met but you will want to check the exact policy language for the state you are purchasing coverage within. For example, you purchase an HSA plan with a $3000 aggregate deductible for you and your spouse and this plan has 100% co-insurance after the aggregate deductible has been met. What this means in practical terms is that both of you will have to meet an "aggregate" total of $6000 in out-of-pocket expenses before you and your spouse are covered at 100%. So, let's say that spouse A has $3000 in medical expenses for an outpatient surgery while spouse B incurs no expenses at all that year and then spouse A has an additional $1000 in expenses for office visits and prescriptions. Even though spouse A had already had $3000 in covered expenses because the deductible exposure of spouse A and spouse B are "aggregated" together, the additional $1000 of expenses incurred by spouse A later in the year are charged against the aggregated deductible amount and remain an out-of-pocket expense.
Under an embedded deductible arrangement with the same $3000 deductible followed by 100% coverage, each spouse has a separate $3000 deductible exposure that once met places that particular spouse into their 100% coverage zone. So, in the example used in the previous paragraph, spouse A would have met their deductible with the initial $3000 expense and their $1000 in subsequent expenses would have been covered at 100% by the insurance company.
Generally the premium difference between plans with an aggregate and an embedded deductible is not that significant, especially as deductibles get higher. For this reason, I rarely recommend an aggregate deductible plan design to my HSA clients.
If you would like more information or a quote for a Health Savings Account based plan please feel free to contact me.
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An aggregate deductible plan requires that more than one deductible be met before the plan's co-insurance and other coverage provisions come into effect. Usually two deductibles have to be met but you will want to check the exact policy language for the state you are purchasing coverage within. For example, you purchase an HSA plan with a $3000 aggregate deductible for you and your spouse and this plan has 100% co-insurance after the aggregate deductible has been met. What this means in practical terms is that both of you will have to meet an "aggregate" total of $6000 in out-of-pocket expenses before you and your spouse are covered at 100%. So, let's say that spouse A has $3000 in medical expenses for an outpatient surgery while spouse B incurs no expenses at all that year and then spouse A has an additional $1000 in expenses for office visits and prescriptions. Even though spouse A had already had $3000 in covered expenses because the deductible exposure of spouse A and spouse B are "aggregated" together, the additional $1000 of expenses incurred by spouse A later in the year are charged against the aggregated deductible amount and remain an out-of-pocket expense.
Under an embedded deductible arrangement with the same $3000 deductible followed by 100% coverage, each spouse has a separate $3000 deductible exposure that once met places that particular spouse into their 100% coverage zone. So, in the example used in the previous paragraph, spouse A would have met their deductible with the initial $3000 expense and their $1000 in subsequent expenses would have been covered at 100% by the insurance company.
Generally the premium difference between plans with an aggregate and an embedded deductible is not that significant, especially as deductibles get higher. For this reason, I rarely recommend an aggregate deductible plan design to my HSA clients.
If you would like more information or a quote for a Health Savings Account based plan please feel free to contact me.