How Does a Family Aggregate Deductible 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.

Let's look at how they work as well as some recent changes to the rules for plans with aggregate deductibles.

Changes That Took Effect in 2016

Aggregate deductibles can still be used and are described in detail below. But since 2016, all family health plans must have embedded out-of-pocket maximums. These cannot exceed the individual out-of-pocket maximum for that year. This applies to all non-grandfathered health plans (and non-grandmothered health plans; grandmothered health plans still exist in many states) in the individual and group insurance markets.

For example, in 2019 the individual out-of-pocket maximum is $7,900. Regardless of how a plan structures its deductible, no single member of a family plan can be responsible for more than $7,900 in charges for covered expenses in 2019 (the federal government has proposed increasing this upper limit to $8,200 in 2020, although many plans will still have individual out-of-pocket limits well below this amount).

That means 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.

Additionally, 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. That's because 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 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 facelift, 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.

File claims even if you know you must pay them yourself because you haven’t yet met your deductible. This is how your health insurance company knows how much you’ve paid toward your deductible. This might seem obvious at first glance, but sometimes people are faced with the option of paying cash and getting a cheaper price than they'd get if the claim were first filed with their insurance. But if they do that, the cash they pay doesn't get counted towards their deductible. There might be circumstances where that's still the better option, but it's important to understand how it all works.

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 insurance will pay for things like your flu shot, your kids’ immunizations, and your mammogram even if you haven’t paid your deductible yet (note that not all preventive care is covered at no cost).

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 2019, the out-of-pocket maximum for an individual is limited to $7,900, and for 2020, it's expected to be $8,200 (it's possible the out-of-pocket limit for 2020 could be changed before it's finalized, as HHS arrived at this number by utilizing a different approach to calculating the inflation adjustment, and that might not be finalized as proposed).

This adjustment to the rules became effective as soon as your health insurance plan renewed in 2016. It will continue to be the case going forward unless the rules change again.

An example illustrates how this works:

Let's say the aggregate deductible for your 2019 family plan is $12,000. Once any individual family member has paid $7,900 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 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.

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