Does Your Health Insurance Deductible Reset Every Year?

The freshness of a new year typically comes with a new cost for people with health insurance: a deductible reset. And, typically, your deductible will be more than last year.

This means that in addition to paying your premium to have a health insurance plan, you still may face significant out-of-pocket costs when you access care until you have met your deductible.

Learning more about how health insurance deductibles work and how they can change from year to year can help you better manage your medical expenses.

What is a deductible?

A health insurance deductible is the amount you pay before your health insurance plan begins to share costs for covered services. 

You typically don’t need to meet your deductible for preventive health services, which are fully covered regardless of whether you’ve met your deductible. But these services may need to be delivered by providers in your plan’s network.

Typically, your deductible increases each year.

When does your health insurance deductible reset?

A deductible resets at the beginning of your benefit year. Typically, a benefit year is a 12-month period that coincides with a calendar year and begins on January 1. Group plans call this 12 months a plan year, while individual plans call this period a policy year.

You can have a deductible for your main health insurance plan, as well as a separate deductible for your prescription coverage or dental insurance.

How do health insurance deductibles work?

Until you pay a certain amount for care during your benefit year, your health insurance plan won’t pay claims except for preventive health services covered under the Affordable Care Act (ACA). 

For example, if you break your arm or have an appointment with your provider during the early part of your benefit year, you could be responsible for the entire amount. The cost of that care will be applied to your deductible. Once you have paid enough to meet your deductible, your insurance plan begins cost-sharing and you are only responsible for copayments (copays) and coinsurance.

What is the average deductible?

For a single person, the average deductible is nearly $2,000 per year, according to an annual survey of private companies and non-federal public firms conducted by Kaiser Family Foundation.

In Kaiser’s 2022 survey, the average general annual deductible for single coverage was $1,763. Nearly one-third of covered workers — 32% — had deductibles of $2,000 or more.

What is the difference between a deductible and a premium?

You are required to pay both a premium and a deductible before you receive covered healthcare services besides preventive care.

A premium is what you pay each month to have an active health insurance plan. A deductible is the fixed amount you pay before the insurance plan shares costs for your healthcare.

We mentioned earlier that you may have more than one deductible on different health plans. You may have more than one premium, too. 

Multiple premiums are common for people covered by Medicare. For instance, a person with original Medicare typically pays nothing for the Part A premium, but will have the Part B premium deducted from their monthly Social Security benefits. And you may have a premium for your Part D prescription plan. Some people also have a premium for their Medigap insurance supplement plan that covers Medicare’s out-of-pocket costs.

In addition, you will have separate deductibles for Part A, Part B, and Part D. Instead of traditional Medicare (Part A and Part B), you may have Part C — a private alternative known as Medicare Advantage (MA). If so, your MA plan and a standalone Part D plan, if you have one, are likely to have deductibles as well.

What happens if you don’t reach your deductible within the year?

If you don’t meet your deductible within your benefit year, your health plan never begins cost-sharing for covered services. As mentioned earlier, preventive health services are fully covered by your health plan if you don’t reach your deductible.

Your health plan can still bring you savings — even if you haven’t met your deductible. For instance, your health plan has negotiated rates for in-network providers. So, if you receive services with in-network providers, you should pay less, even without meeting your deductible.

How can you reach your deductible quickly?

Having a low deductible can help you reach it faster. Some health plans offer higher premiums and lower deductibles. That means you’ll pay more per month, but you’ll have less to pay before the insurance begins cost-sharing because you will reach your deductible faster.

This is true for the ACA metal tier plan categories. For instance, ACA bronze plans have the lowest premiums and some of the highest deductibles, which can be thousands of dollars per year. Likewise, ACA platinum plans have the highest premiums, but deductibles are very low. 

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Written by:

Kristen Gerencher, MSOT

Kristen Gerencher is an award-winning writer who has reported on healthcare, medicine, and insurance for a variety of national publications. Before contributing to GoodRx, she was a healthcare and personal finance reporter for MarketWatch.

Edited by:

Cindy George, MPH

Cindy George is the senior personal finance editor at GoodRx. She is an endlessly curious health journalist and digital storyteller.

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