In 2019, the average health insurance premium for a family of four was around $20,000.
But what portion of that is your deductible? Many insurances offer low premiums but have a high deductible.
So is high deductible health insurance better? Or should you get one with a low deductible? Keep reading to find out!
What is a High Deductible?
A high deductible health plan (HDHP) is a health plan that normally has a lower monthly option, but you’ll have a higher deductible than other plans.
While these can be great for some people, they may have you spending more money if you go to the doctor frequently.
Why Are the Deductibles So High?
No employer or insurance company is allowed to charge an employee a higher premium if they’re expected to have costs that are above average. Because of that, many insurance companies decided that for those people, they would just make the deductibles higher in order to make money for themselves.
To make a plan that is more appealing to healthy people rather than sick people, they offered insurances that have a lower premium but with a higher deductible.
That’s because sick people are more likely to need a lower out-of-pocket cost and want more network options. Healthy people don’t want to have to pay anything, but if they do become sick, the high deductible could end up costing them a lot of money.
Benefits of a High Deductible Plan
You’ll have a lower premium, which normally evens out with your high deductible. If you don’t foresee any big medical expenses for that year, you may save money by choosing that plan.
However, you also have to plan for if the worst-case scenario.
Check to see what the out-of-pocket costs are with that plan. If something goes wrong, will you be able to cover that? If you don’t, then you may end up going into debt because you can’t pay your medical bills.
Eligible for HSA
In addition to that, you’ll also be able to contribute to your health savings account.
There are certain eligibility criteria that you’ll have to meet in order to do that. But if you can, you’ll be able to save a lot of money by putting money into your HSA. That’s because you put money into your HSA before it’s taxed.
So if you’re in a 24% federal tax bracket, you could save around $25 on a $100 medical bill.
To be eligible, you have to have an HDHP, and you have to contribute to the HSA to receive any of your employer’s contributions as well.
This free contribution that employees will match is similar to some 401(k) programs. In fact, it’s one of the other added benefits of having an HDHP.
You also don’t need to keep that plan to use your HSA in the future. You could keep that plan for now, and if you have more medical bills, you can switch plans and still use all of the money you have saved in there. This can be a great way to save yourself from going into medical debt in the future as well.
So if you’re wondering who should get an HSA, everyone could benefit!
Problems With High-Deductible Health Plan
While these benefits can be great, there are risks of high deductible health insurance.
When you have a higher deductible, it means that you’ll have to pay higher out-of-pocket costs when you go to the doctor.
However, if you stay in-network, most high deductible plans will still cover preventive care at 100%.
When you have a high deductible, you’ll have to pay a lot more money before the insurance steps in and starts covering it for you. So if you’re going to have two surgeries that year, you may have to pay everything for one of the surgeries before the insurance will step in and cover some (or all) of it.
How to Choose a Plan For You
When it comes to choosing a plan, you should do your research. Most employers only let you choose once a year, and once you choose, you’re locked into that plan for the next year.
If you’re healthy and only go to the doctor every now and then, you should choose a plan that has a high deductible and a low premium. Since the premium is what you’ll pay each month, you’ll save money if you don’t go to the doctor.
However, if you are someone who always has to go to the hospital or take medications, you should pay the higher premiums because you’ll get a better deal on your money with the low deductible.
However, money isn’t the only factor that you should consider. You should see which insurance plan offers the most coverage. If you’re someone who needs to see a bunch of different specialists, you may want to find a plan that offers all kinds of in-network options.
Learn More About: Is High Deductible Health Insurance Better
These are only a few things to know if you’re wondering, “Is high deductible health insurance better?” But there are many more things to be aware of!
We know that choosing a health care insurance plan can be confusing and overwhelming, but you don’t have to figure it out all on your own. We’re here to help you out!
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