High Deductible Health Plans
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Today’s health insurance plan choices can certainly be pretty confusing. And of course, many of those that provide good coverage can also have rather high monthly premiums as well. If you’re looking to save some money on health insurance, you might consider a high deductible health plan.
The deductible is the amount you must pay out-of-pocket first for any healthcare and medical expenses before your health insurance actually covers any expenses. Obviously, a high deductible doesn’t look especially attractive at first, but there are actually times when a high deductible health plan might be the best choice for you and/or your family.
What is Considered to be a High Deductible Health Plan?
Starting in 2020, any health insurance plan with a deductible of $1,400 for individual plans and $2,800 for family plans is considered to be a high deductible health plan. Such high deductibles look scary at first, but the monthly premiums can be significantly lower than many other health insurance plan offerings. And such plans can be particular advantageous dependent on your health and expected medical expenses for the year.
The Advantages of High Deductible Health Plans
Low Monthly Premiums
The biggest advantage of choosing a high deductible health plan is the low monthly premiums you’ll be paying. If you don’t expect to have a lot of medical expenses for the year, you could save a great sum of money by choosing this type of health insurance plan. As an example, consider a health insurance plan with a low deductible but high premiums of approximately $400 for an individual plan. Multiple your premium by 12 months, and you’ll be paying $4,800 for the year.
On the other hand, if you select a high deductible health plan with a deductible of $1,400 and monthly premiums of $200, you’ll pay $2,400 in premiums.
And even if you wind up with unexpected medical expenses that require you to pay your full deductible, you’ll only pay a total of $3,800, which is $1,000 less than the low deductible plan. If you don’t expect to have many medical expenses, then the high deductible health plan definitely makes more sense.
Options for a Health Savings Account (HSA)
If you are worried about the high deductible, you can open a HAS to help offset the cost. This special account is only available to those with high deductible health plans, and is specially designed to help you save money on healthcare costs.
HSAs work by enabling you to add non-taxed funds directly to the account, which can be used at a later point for healthcare costs. HSAs typically have a maximum contribution limit, but the money can also be rolled over from year to year. If you can manage to contribute at least enough to meet your deductible, then you eliminate the worry of unexpected healthcare costs.
A Good Choice if You Have Savings
If you don’t open a HSA but have decent savings, a high deductible health plan might still be a good choice because you’ll have the savings available to handle any health insurance costs until your deductible is met.
High Deductible Health Insurance Plans and Copayments
It is important to note that some high deductible plans also require you to pay copayments even after the deductible is met. You’ll want to try to avoid these because the n the savings are not as great as you initially thought. If available, choose a plan that covers all healthcare expenses once the deductible has been met.
Before choosing any health insurance plan, carefully research both the costs and the coverage, so that you can make an informed decision and choose the best possible health insurance plan for your needs.