Health insurance is important, but it can also be expensive. You may feel like you have to choose between seeing a doctor and paying your premium. High deductible health insurance plans make coverage more affordable for many people. When should you choose this option?
What is a High Deductible Health Insurance Plan?
High deductible health insurance plans feature lower monthly premiums and a deductible that can range from around $1,000 to $5,000 or higher. You pay for most health-related expenses until the deductible is met, and you may pay more for care from out-of-network providers. The plan may also require co-pays or coinsurance. After the deductible is met, many plans cover routine healthcare and major services according to the plan terms.
What are the Advantages?
You will save money on monthly premiums when you choose a high deductible plan. You are often eligible to open a health savings account (HSA), where you can contribute pre-tax dollars to pay for your deductible and other qualified medical expenses; these funds roll over and can grow year to year. For more background on HDHPs and HSAs, see High-Deductible Health Plans (HDHPs), HSAs, and Insurance Costs.
What are the Disadvantages?
High deductible plans may not cover every health need you have without a significant out-of-pocket cost. Check any policy before you buy to confirm coverage for maternity care, well-child visits, prescription drugs, and other services you expect to use.
You must also make sure you can afford the deductible. Insurance typically does not pay for medical expenses, including doctor visits, prescriptions, or hospital care, until the deductible is paid.
Is a High Deductible Health Insurance Policy Right for You?
The high deductible can intimidate many consumers, but this type of insurance may be a good choice if you are generally healthy and do not expect frequent medical expenses. You can often save money on premiums if you use little care during the year.
The HSA is another advantage: you can use pretax savings to pay for eligible medical costs while lowering your taxable income and building a balance for future needs.
How to Maximize Your High Deductible Coverage
Get the most from your high deductible plan by shopping around and comparing plan details. Not all high deductible plans are created equal; compare premiums, deductibles, in-network provider lists, and covered services before you enroll.
Consider strategies to reduce costs such as asking providers for lower fees, requesting generics instead of brand-name drugs, or discussing alternative treatments. You can also review related plan features like deductible aggregation and program options at Aggregate Deductible Programs.
If you want personalized help, talk to an agent who can review plans and help you weigh premiums versus out-of-pocket exposure.
Frequently Asked Questions
How does an HSA work with a high deductible plan?
An HSA lets you save pre-tax dollars to pay for qualifying medical expenses, and funds roll over year to year; eligibility typically requires enrollment in a qualifying high deductible plan.
Will preventive care be covered before I meet the deductible?
Many plans cover certain preventive services at no cost even before the deductible is met, but coverage varies, so check your plan documents.
What happens if I need expensive care early in the year?
If you have large medical expenses before meeting the deductible, you will pay more out of pocket compared with a low-deductible plan, though the plan will begin sharing costs once the deductible is reached.
Can I switch plans if my needs change?
You can generally change plans during open enrollment or after qualifying life events; review timing and options with your insurer or broker.