What Is A Carryover Provision?
A carryover provision is a clause in some health insurance plans that allows policyholders to carry over unused deductible payments from one year to the next. This can be helpful for policyholders who have high out-of-pocket medical expenses in one year, as it can help them to meet their deductible more quickly in the following year.
How does a carryover provision work?
Each health insurance plan has its own rules for how carryover provisions work. However, most plans work in a similar way. Typically, policyholders can carry over any unused deductible payments from the last three months of the year to the first three months of the following year.
For example, if a policyholder has a $1,000 deductible and they pay $500 in medical expenses in December, they would be able to carry over the remaining $500 to the following year. This means that their deductible for the following year would be $500 instead of $1,000.
Benefits of a carryover provision
There are a few benefits to having a carryover provision in your health insurance plan. First, it can help you to save money on out-of-pocket medical expenses. If you have a high deductible plan, a carryover provision can help you to meet your deductible more quickly, which means that you will start paying coinsurance or copays sooner.
Second, a carryover provision can give you peace of mind. If you have a chronic medical condition or you are expecting to have a major medical procedure, a carryover provision can help you to budget for your out-of-pocket medical expenses.
Drawbacks of a carryover provision
There are a few drawbacks to having a carryover provision in your health insurance plan. First, carryover provisions can make health insurance plans more expensive. Insurance companies charge higher premiums for plans with carryover provisions because they know that policyholders are more likely to use the full amount of their deductible.
Second, carryover provisions can encourage policyholders to delay necessary medical care. If a policyholder knows that they can carry over their unused deductible payments to the following year, they may be less likely to seek medical care in the current year. This can lead to more serious health problems down the road.
How to decide if a carryover provision is right for you
Whether or not a carryover provision is right for you depends on your individual circumstances. If you have a high deductible plan and you are concerned about your out-of-pocket medical expenses, a carryover provision may be a good option for you. However, if you are on a budget, you may want to choose a plan without a carryover provision in order to save money on your premiums.
If you are considering a health insurance plan with a carryover provision, be sure to read the plan’s fine print carefully. Make sure you understand how the carryover provision works and what the limitations are.