What Does It Mean to Have a Family Deductible?

An active health insurance policy pays a portion of your expenses when you see a doctor, go to the hospital, have surgery or buy prescription medications. However, insurance companies won't pay a dime until you meet the deductible that applies to the plan you've chosen. If other members of your family are on the same policy, your plan may include two deductibles: an individual deductible and a family deductible.

A deductible is the amount of money you must pay on your own before your health insurance company will start helping with your expenses. For example, if your insurance policy covers 80 percent of your medical costs, with a $500 annual deductible, you must pay at least $500 out-of-pocket before the policy begins paying anything. After you have paid $500 in expenses, the insurance policy will cover 80 percent of your medical bills for the rest of the calendar year.

An individual deductible is a deductible that applies to only one person on the policy. For example, if your individual deductible is $300, the plan will begin covering your expenses after you have paid $300 out-of-pocket for your own medical costs. This amount does not include any of your other family members' medical bills.

A family deducible, on the other hand, applies to the total costs incurred by all members on the policy. For example, if your family deductible is $1,000, the policy will begin covering your family's health care expenses after you have spent $1,000 out-of-pocket for family members' medical costs.

Insurance policies don't require you to meet both deductibles before they begin paying your claims. If you meet the family deductible, for example, members no longer need to meet the individual deductible before the insurance company begins to pay. Likewise, if an individual on the policy meets his deductible, the insurance company will start paying on his claims, even if the family deductible has not yet been met.

Depending on your insurance policy, deductibles may not apply to some services. For example, many policies will pay for preventive care, such as an annual checkup, regardless of whether you have met either of your deductibles. Most payments you make to cover medical expenses will apply to both your individual deductible and family deductible. However, any co-pays your policy requires for services that are automatically covered will not apply to either deductible.