How does a health insurance company know how much you've paid toward your deductible?

Example: It's the first day of your plan year so you have your full $1000 deductible left to meet. You go to your doctor and get a $200 procedure done. Your doctor sends a claim to your insurance company for the $200. The insurance company subtracts $200 from your deductible amount (leaving $800 remaining to be met) and sends the doctor a reply stating that you have not met your deductible yet so the full $200 is due. The doctor sends you a bill for $200.

You now need to get a $800 procedure done but haven't paid your first bill yet. You get the $800 procedure done by the same doctor. The doctor sends the claim to your insurance company. This time the insurance company lets the doctor know that you owe the full $800 (since that is what you had left to meet your deductible), but that now your deductible has been met for the remainder of the plan year. The doctor now sends you another bill for the $800.

At this point the insurance company considers your $1000 deductible fully met, yet you haven't paid anyone a single cent. It is now up to your provider (the doctor) to collect the money you owe him. Regardless of this, your future services will have your benefits applied since your deductible has been met.

This is what many people don't understand about deductibles: they are not the amount you have paid, they are the amount of debt you've accumulated.

*Please note that the above is a simplistic example meant to explain the basics of how deductibles work. Therefore, it did not include contract discounts, in-network vs. out-of-network services, or any other factors that would complicate the issue. Please contact your insurance company if you have concerns about your policy.