A high deductible health insurance plan is just like what it sounds like. It is a health insurance plan that has a high deductible and is designed to provide for catastrophic coverage in case something happens to you. It is a viable option for people who are struggling to find health insurance at a reasonable price.
How High Deductible Health Insurance Plans Work
High deductible health insurance plans usually have lower premiums and higher deductibles than standard health insurance plans. Usually high deductible health insurance plans are part health savings account (HSA) plan.
Most high deductible plans usually include some “wellness” benefits for free such as routine physicals and flu shots. But, that is not where high deductible health insurance plans earn their bread and butter. Beyond routine wellness exams, high deductible plans typically only kick in once the deductible is met. However, the maximum deductible is set by law. So, you know what you will have to pay.
High Deductible Health Insurance Plan Costs
Currently, high deductible health insurance plans typically have a minimum deductible of $1,200 per year for individuals and $2,400 per year for families. High deductible health plans also have a maximum out of pocket expense, which is the most that you will pay per year for medical expenses. Currently, the out of pocket maximum for individuals is $5,950 and $11,900 for families.
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Benefits of High Deductible Health Insurance Plans
The biggest benefit of a high deductible health insurance plan is the upfront savings. These plans offer significantly lower premiums compared to traditional health insurance plans. Also, since these plans are usually used in conjunction with a health savings account, you can use pre-tax money to pay for the premiums.
Finally, if you are utilizing this type of plan through an employer, the employer usually contributes an amount of money towards health care costs, which could cover the entire annual premium in many cases.
High deductible health insurance plans are tailored to individuals who do not need a lot of medical care. If you only typically get an annual physical and flu shot each year, and not much else in the way of medical care, then a High deductible health insurance plan may be right for you.
High deductible health insurance plans are very cost effective. While they may reduce your likelihood to get some routine care, it still provides coverage should a catastrophe occur and you require serious medical care. At the end of the day, you know what your maximum out of pocket expense will be every year with a high deductible health insurance plans.
Yeah I would think this would mostly be a good idea for people who are in great health that are not likely to need to claim any big medical expenses. Thinking about health insurance makes me glad that I live in Canada where we don’t have to worry about that kind of thing.
Good point, although technically we Canadians pay for that healthcare via our taxes. Turns out it actually isn’t free 🙂
Great write-up Hank! I love educating and this area certainly causes some confusion for many people.
If you’re healthy, a high deductible plan certainly should be something you consider.
If you are in great health this is not bad until of course something unexpected happens. It’s such a gamble but might be one worth taking.
In theory a higher deductible encourages the use of medical facilities only when truly needed and can lead to cost savings. In reality this is not the case for a variety of reasons, chief among them the fact that we have so many uninsured using the ER in lieu of a family doctor.
The big problem is also when employers ONLY offer a HDHP. We have one with a $4000 deductible. Last year with my surgury was the first time we ever hit the deductible. Which basically means that we are usually paying for insurance that we aren’t actually using.
I had a high deductible health plan back when I didn’t have a job, but it seems to me my deductible was a lot higher than the individual deductible you mentioned above. At any rate the policy came in handy when I had to have an unexpected surgery!
People should perform a simple risk/reward analysis when evaluating these plans. The deductible is often bigger than the premium savings, which scares many people away.
But the premium savings are certain, while the incremental out of pocket costs are only a possibility. It’s an educated gamble that can generate big savings over time.
Great work indeed this is very helpful for in all the means as as it is very serious scenario!!
This is important especially when it comes to health. We will never know what to expect or what might happen in the future so it’s better to be ready. For this plan, it might be helpful to people that need frequent medical assistance those who are positively healthy. This is something people should know when searching for the right health insurance. You raised this topic well Hank, looking forward to read more articles like this.
Hank, it looks like you did quite the research about high deductible health insurance plans. I always thought that it would be somewhat difficult to afford those type of plans. Mainly because of the monthly cost and the out of pocket expenses. Well, based on what you wrote it looks like there would be a way to make it affordable.
I was recently laid off from work and need to get medical coverage for my family. As an unemployed person, I need to find a comprehensive health coverage at a lower than usual rate. Even it if were to contain flexible payment plans, that would at least be something to work with.
Taking a look at these plans are a good idea, until you REALLY look. Virtually nothing is covered (unless it’s a once a year physical). My company now only offers this program and covering a family I’m looking at costs. my so-called savings is about $1150.00 a year in premiums (which sounds GREAT right?) but lets look at any surgical procedure (say a knee or a shoulder). So now, as a family, deductible is $2400.00 (so that’s more than double my savings on premiums), but read a little further, it say maximum out of pocket is $11,900.00, so… really this stiffs just about ANYONE that could have any accident (from a fall at home to some type of accident). Make a note that PRESCRIPTIONS are a part of this as well, so as my generous company is giving me this savings, that my 1st prescription in January (based on current data will cost me $900.00 for a 30 day supply). Not sure about the average person here, but that which cost be $7.17 prior with my CAREMARK insurance (which is rolled into this fiasco) is going to force me to actually take out a loan just to get a prescription. So, my out of pocket expenses will ACTUALLY be close to $10,000 for the year (after the $1150.00 I am being told I will save). These plans are TRULY for the young and willing to risk it. I have a family to consider and I find this reprehensible. Even if I throw the $1150.00 that I am being told I will save in overall costs, it still costs me substantially more. I know that my PCP requires UP FRONT payment, so I go to see him if I have a sore throat and think it may be Strep. Office visit is a staggering $250.00 (before a test is done), then a strep test is done – and it’s another $75.00. Then I have to get a prescription or 2 – so lets say an antibiotic and some sore throat medication – maybe another $100.00? So if my math is right, that’s $425.00 for a case of Strep throat? They want people to shop for services – so a PCP is essentially out of the picture since you should shop EVERYTHING according to my crack HR staff here. So if you’re sick, you can either, spend a bunch of money for something that would have cost something minimum OR just take time off of work and hope that it just goes away in a few days. Does that seem at all rational? Refusing to go to a Dr. since you can’t afford it and then the company loses due to lost time with people being out. Maybe I’m wrong about all of this, but this is how this article is explained to me and is pretty much in concert with what I’ve been provided by my HR department. So if you’re single and young – you can risk it, but if you’re older have a family (and God forbid that you want to have a child), I see no way that this is a benefit in any way but to the company that is paying less in premiums at the expense of their employees and family health. So much for family comes first….