What is a carry-over provision?
A carry-over provision is a health insurance provision that allows a person to apply, or carry over, medical expenses from the last three months of the current year to the next year’s deductible. After that deductible is paid, the insurance company picks up coverage of the remaining cost up to the policy limits.
A carry-over provision helps lessen out-of-pocket health care costs. That’s because the person will be paying all or part of his or her deductible for the new year with last year’s expenses.
This is only applicable when the insured has room left on his or her deductible, after submitting medical expenses from January through September and then incurs a medical expense from October to December. This is also known as a fourth-quarter deductible carry-over.
To be sure, this protects the policyholder from paying a deductible for medical expenses incurred in November and then paying another deductible for medical expenses in January of the new calendar year.
Though it is more common among employer-sponsored health plans, the deductible carry-over credit is available through individual health plans as well.
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Carry-over provision example
Richard’s health insurance has a carry-over provision. He is enrolled in a BBF Insurance plan with a $2,500 deductible, and he has applied $1,500 worth of health care expenses toward his deductible in the first nine months of the year.
When he files $1,000 in expenses from a medical procedure in November, the insurer carries over that expense, applying it to the next year’s deductible. That means Richard has only $1,500 left on his deductible for the next year.
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