A corridor deductible is a type of deductible typically found in supplemental health insurance plans, particularly Major Medical Expense Policies. It is designed to apply after the benefits of a basic health insurance policy have been exhausted but before the major medical coverage begins. Here’s how it works:
- Integration with Basic Coverage:
- The corridor deductible comes into play after the insured has used up the benefits provided by a basic health insurance plan. The basic plan might cover a set amount of initial medical expenses, and once this limit is reached, the corridor deductible must be met.
- Intermediate Step:
- The corridor deductible acts as an intermediate step between the basic plan’s coverage and the major medical plan’s coverage. The insured pays out-of-pocket costs up to the amount of the corridor deductible before the major medical coverage kicks in.
- Additional Out-of-Pocket Requirement:
- This deductible requires the insured to pay an additional out-of-pocket amount after the basic plan’s limits are exhausted but before the major medical plan begins to pay. This can help reduce the premium costs for the major medical plan.
- Example:
- Suppose an insured individual has a basic health insurance plan that covers the first $5,000 of medical expenses.
- After these initial benefits are exhausted, there is a corridor deductible of $1,000.
- The insured must pay this $1,000 out-of-pocket.
- Once the corridor deductible is met, the major medical expense policy starts covering additional medical expenses.
- Structure:
- Basic Plan: Covers initial medical expenses up to its limit.
- Corridor Deductible: The insured pays this amount out-of-pocket after the basic plan’s coverage ends.
- Major Medical Plan: Begins to cover expenses after the corridor deductible is satisfied.
- Purpose:
- The corridor deductible helps to bridge the gap between the basic insurance coverage and the major medical coverage, ensuring that the insured has some out-of-pocket responsibility before the higher level of insurance coverage starts.
In summary, a corridor deductible is an additional deductible that must be met after the benefits of a basic health insurance plan have been exhausted but before the major medical expense policy begins to provide coverage. It serves as an intermediate step that requires the insured to pay out-of-pocket costs, helping to control premium costs for the major medical plan.