Health Insurance Articles
What To Know About The Accumulation Period Of A Policy
2011-08-23
Any health insurance policy which requires a deductible to be met prior to the insurance company paying any money into it will have guidelines. The guidelines are that of a very definable accumulation period as well as how much the insurance company will pay once the deductible has been met. This is often called coinsurance and may be a specific percentage of the total medical expenses incurred.
The accumulation period is how long you have to build towards your deductible. This is very important to know because you need to make sure that you have a clear understanding so that you aren't anticipating insurance covering expenses only to learn that it has been reset. Most insurance companies set their accumulation period based on the calendar year. This means that it will run from January 1st to December 31st.
If you have a $2,000 deductible to meet, that means that you must first pay $2,000 of your own money towards your health expenses before the insurance company will begin to start paying their share of the expenses. That $2,000 is tracked over time, starting on January 1st. If you spend $500 in March and then another $1,200 in October, that brings your contribution to $1,700.
If you are suddenly sick on January 2nd and the expenses are well over $500, however, insurance isn't going to start kicking in. The cycle has reset and anything that you contributed into the previous year isn't taken into consideration. This can have a devastating effect on your finances if you didn't account for that in your financial planning.
It is important to be aware of the accumulation period so that you can properly account for your expenses as it pertains to getting close to your deductible amount. With this type of insurance planning is important. There are some health insurance policy companies that will give you longer accumulation periods and some that will base it on an ongoing 12 months instead of a calendar 12 months. This would allow you to benefit a little greater because you are no longer confined to the definition of January through December.
Ultimately, the deductible needs to be met before the insurance company will start paying towards any of your expenses. You need to read through the policy guidelines so that you are aware of this period so that you aren't sending in claims that will be later denied simply because you didn't read through the rules. The longer the period, the better it is for you so that you are able to meet the deductible quicker and have insurance take on some of the expenses with you.
