How Does a Family Aggregate Deductible Work?

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 rule changes that were implemented to protect consumers in 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 2021 the individual out-of-pocket maximum is $8,550, and in 2022, it will be $8,700. Regardless of how a plan structures its deductible, no single member of a family plan can be responsible for more than $8,550 in charges for in-network covered expenses in 2021, or for more than $8,700 in in-network covered expenses in 2022.

So a health plan cannot have, for example, a $10,000 aggregate deductible. 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 post-deductible healthcare 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 healthcare 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 healthcare 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 healthcare 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 healthcare 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. And if the plan is an HMO or EPO, the services will likely have to be received from an in-network medical provider, as those plans generally don't cover out-of-network medical care.

If the plan is a PPO or POS, it will likely provide coverage for out-of-network care, but with a higher deductible and out-of-pocket maximum. The out-of-pocket maximums described above are only applicable for in-network care. Health plans can have higher limits if they provide out-of-network coverage, so be sure you understand how your health plan works.

As long as you stay in-network, the doctor or hospital will submit the claims on your behalf, and you'll be able to see progress towards your deductible on the explanation of benefits that your insurer sends to you.

If you have a plan that provides out-of-network coverage, you may have to file your own claims if you see an out-of-network provider. You'll want to do this even if you know that you haven't met the deductible and will need to pay the full cost yourself. That will allow your insurer to track your progress toward your out-of-network deductible. If you do end up meeting it during the year, your insurer will begin to pay some of your out-of-network expenses as well (again, many health plans do not cover out-of-network care at all, unless it's an emergency, so this may not be applicable for your plan).

What Expenses Are Exempt From the Aggregate Deductible?

In the United States, the Affordable Care Act requires that health plans pay for preventive healthcare 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 screening 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 2021, it's $8,550; for 2022, it's $8,700).

An example illustrates how this works:

Let's say the aggregate deductible for your 2021 family plan is $12,000. Once any individual family member has paid $8,550 toward the aggregate deductible amount in 2021, 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.