It indicates that the insurance company has processed and applied the claim towards the patient’s yearly deductible amount for that calendar year when the claim is processed towards the PR 1 denial code for the deductible amount.
For a better understanding of the PR 1 Denial Code, let’s look at the definitions of deductible amount and in-network versus out-of-network providers.

What exactly does ″Deductible Amount″ mean?
The amount you pay for covered health care services before your insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself. After you pay your deductible, you usually pay only a. copayment.
A deductible is an amount the insured has to pay as part of a claim whenever it arises, and the rest of the amount is paid by the insurance company. Need an example? Read on.
How it works – If your plan’s deductible amount is Rs. 10,000 and the health care claim is of Rs. 35,000, your insurance company will be liable to pay Rs.35000-10000=Rs.25,000. Rs. 10,000 will be paid from your pocket because it is your policy plan’s deductible amount.
Or say, for instance, your health care claim is of Rs. 15,000 and your plan’s deductible amount is Rs. 20,000, your insurance company will pay nothing since the amount is below the deductible limit.
Your insurance company will only be liable to pay when the amount exceeds the deductible amount.
For example, if your policy states a $500 deductible, and your insurer has determined that you have an insured loss worth $10,000, you would receive a claims check for $9,500.
Percentage deductibles generally only apply to homeowners policies and are calculated based on a percentage of the home’s insured value. Therefore, if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from any claim payment. In the event of the $10,000 insurance loss, you would be paid $8,000. For a $25,000 loss, your claim check would be $23,000.
How Do Homeowners Insurance Deductibles Work?
Homeowners are responsible to pay their deductible before the insurance company pays a claim. Some homeowners insurance policies state the deductible as a dollar amount or as a percentage, normally around 2%. Dollar amounts are based on individual claims. So if you file a claim for $10,000 now and a $25,000 claim six months later and have a $1,000 deductible, you are responsible for $2,000 out of pocket ($1,000 for each claim) while your insurer covers the rest. With percentage claims, you agree to pay a portion of your property’s insured value for individual claims.
This is basically done by all insurance companies to limit the insurer’s from making small claims and in a way to tell them in advance that a part of the total sum will be paid by them.
This way, only genuine claims are made. It is very important to understand the deductible structure of a health insurance plan before planning to buy any particular policy.
Please Note:
- An insurance deductible is a specific amount you must spend before your insurance policy pays for some or all of your claims.
- Insurance companies use deductibles to ensure policyholders have skin in the game and will share the cost of any claims.
- Deductibles cushion against financial stress caused by catastrophic loss or an accumulation of small losses all at once for an insurer.
- In addition to premiums, individuals must meet health insurance deductibles and may also be required for other costs like copays and coinsurance, depending on their plans.
- The general rule is that policies with higher premiums come with lower deductibles while those with lower premiums tend to have higher deductibles.
Why Insurance Policies Have Deductibles
Deductibles help insurance companies share costs with policyholders when they make claims. But there are two other reasons why companies use deductibles, including moral hazards and financial stability.
Insurance policies use deductibles to ensure a measure of financial stability on the part of the insurer by reducing the severity of claims. A policy that is properly structured provides protection against catastrophic loss. A deductible provides a cushion between any given minimal loss and a truly catastrophic loss.
You’re also required to cover the following:
Copayments or copays. These are set amounts that you pay for specific covered health care expenses. For example, you might have a $10 primary care copay and a $40 copay for specialists. You don’t need to meet your deductible first.
Coinsurance. Once you meet your deductible, you’ll be responsible for part of your health care costs, and your plan will pay the rest. This is called coinsurance. You continue to pay coinsurance until you meet your out-of-pocket maximum for the year.
About us
Billing Executive – a Medical Billing and Coding Knowledge Base for Physicians, Office staff, Medical Billers and Coders, including resources pertaining to HCPCS Codes, CPT Codes, ICD-10 billing codes, Modifiers, POS Codes, Revenue Codes, Billing Errors, Denials and Rejections.
We have more than 10 years experience in US Medical Billing and hand-on experience in Web Management, SEO, Content Marketing & Business Development with Research as a special forte.
Read More:
Complete Medicare Denial Codes List – Updated
What is Denial Code CO 47? Missing or Invalid Diagnosis
CO 119 & PR 119 – Benefit Maximum for this Time Period has been Reached
Insurance Denial CO 38: Services Not Authorized by Providers
Leave a Reply