Deductible
Deductibles are typically used to deter the large number of claims that a consumer can be reasonably expected to bear the cost of. By restricting its coverage to events that are significant enough to incur large costs, the insurance firm expects to pay out slightly smaller amounts much less frequently, incurring much higher savings. As a result, insurance premiums are typically cheaper when they involve higher deductibles. For example, health insurance companies offer plans with high premiums and low deductibles, or plans with low premiums and high deductibles. One plan may have a premium of $1,087 a month with a $6,000 deductible, while a competitive plan may have a premium of $877 a month with a $12,700 deductible. The consumer with the $6,000 deductible will have to pay $6,000 in health care costs before the insurance plan pays anything. The consumer with the $12,700 deductible will have to pay $12,700.
Mitch Daniels
The plan allows low to moderate income households where the members have no access to employer provided healthcare to apply for coverage. The fee for coverage is calculated using a formula that results in a charge between 2%–5% of a person's income. A $1,100 annual deductible is standard on all policies and allows applicants to qualify for a health savings account. The plan pays a maximum of $300,000 in annual benefits.