Is a Health Insurance Deductible Prorated for Mid-Year Enrollees?

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It may seem unfair to have to pay your entire deductible if you don’t sign up for health insurance until the middle the year. After all, you’re only getting health insurance for half of the year if you enroll mid-year; shouldn’t the deductible be prorated to half of the annual deductible?

Since deductibles are so expensive, requiring payment of the full annual deductible if you enroll after part of the policy-year is over makes it less likely you'll reach your deductible that year. In this case, you'll be less likely to reap the benefit of having your health insurer start to pay post-deductible benefits when you have claims.

Unfortunately, an annual health insurance deductible isn’t prorated for partial year enrollees no matter how few months are left in the plan-year when you sign up for health insurance. The out-of-pocket maximum isn't prorated, either.


Calendar-Year Policy

You’re uninsured for the months of January through June. You get married during the month of June making you eligible for a special enrollment period (note that this special enrollment period is available if you're eligible for your employer's plan, but it would only be available for an individual market plan—including a plan purchase in the exchange—if you or your spouse already had coverage before getting married). You sign up for health insurance coverage on your state’s Affordable Care Act health insurance exchange starting on July 1 with an annual deductible of $2,000.

All Obamacare plans (on and off-exchange) have a plan year that runs from January 1 through December 31. If you use your health insurance between July 1 and December 31 for anything other than preventive health care or services that are covered with a copay, your health insurer won’t begin to pay part of your health care bills that are subject to the deductible until you’ve paid the entire $2,000 deductible. Even though you only have health insurance coverage for half of the year, you still have to pay the entire deductible before your insurer will start picking up the tab (if you have coverage that includes copays for things like office visits and prescriptions, those benefits can kick in from the start, regardless of whether you've paid anything towards the deductible).

Non-Calendar-Year Policy

You’re hired for a new job in early February. Your new employer will provide health insurance coverage as part of your employee benefits package starting March 1. The employer has open enrollment every August for a plan year that runs from October 1 through September 30 of each year.

Since you’re a new employee with an initial enrollment in the middle of the plan year, you’ll only have seven months of coverage before a new plan year begins in October and the amount you’ve paid toward your annual deductible resets back to zero. Despite your shortened coverage year, you’re held to the same deductible amount as the other employees who selected that plan during open enrollment last August.

Note that many employers opt to use calendar-year plans, and hold their open enrollment in the fall to correspond to a January 1 start date for the plan year. But employers have more flexibility in this and can purchase a plan at any time during the year to cover their employees.

Health Insurance Deductibles Generally Aren't Transferable From Plan to Plan

If you switch from one health plan to another during the policy year, in almost all cases, the amount you had already paid toward your annual deductible in the health plan you had early in the year is not credited toward the annual deductible in the health plan you have later in the year. When you enroll in the new health plan, the amount you’ve paid toward your new deductible starts at zero even if you had already paid your entire annual deductible in the other plan.

Although it's almost always the case that deductibles aren't transferable from one plan to another, this can sometimes be modified based on extenuating circumstances that impact a large number of policyholders and intervention from the state Insurance Commissioner. An example is the solution that was created for members of New York's Health Republic Insurance, which shut down in November 2015. An agreement between NY state regulators and three private insurance companies allowed Health Republic members to get credit (on their new December 2015 coverage) for their deductible and out-of-pocket expenses that they had already paid during the first 11 months of the year. Oregon regulators worked out a similar agreement for Oregon Health CO-OP members when the CO-OP shut down at the end of July 2016.

Some insurance companies will also make exceptions when an enrollee switches from one plan to another within the same insurance company. An example might be a person who has individual market coverage and then switches to a small group plan with the same insurer mid-year, or a person who has coverage under an off-exchange plan and then switches to an on-exchange version of the same plan mid-year due to a qualifying event. There is no requirement that the insurer credit the enrollee for the amount they had paid towards their deductible on the first plan, but there is also nothing preventing them from allowing a deductible carryover credit—and it can't hurt to ask, because sometimes they say yes.


You had health insurance coverage with an individual market plan (ie, a plan you bought yourself, either in the exchange or directly from an insurer) from January 1 through July 31. During that time, you paid $1,300 toward your $2,000 health insurance deductible. You drop your individual plan when you get job-based health insurance coverage beginning August 1. This new job-based coverage has an annual deductible of $1,000.

The $1,300 you already paid toward your Obamacare coverage does not count toward your new job-based health insurance deductible. You must start from scratch, paying the entire $1,000 job-based health insurance plan’s deductible before that insurer begins to pick up the tab for your medical bills that are subject to the deductible (as noted above, it's possible—although unlikely—to end up in a situation in which the individual market plan was offered by the same insurer that's offering the new job-based plan, and get them to agree to a deductible carryover credit. But this is the exception to the rule; in general, you should expect to have to start over with your deductible if you switch to a new plan mid-year).

Can You Recoup the Money If You Have to Pay Twice in One Year?

There’s no way to recoup all of the additional money you spent toward your health insurance deductible when you switch plans mid-year after paying the first plan’s deductible. However, cost-sharing expenses like deductibles, copays, and coinsurance can sometimes be used as a tax deduction resulting in lower income taxes.

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