High Deductible Health Plans: Buyer Beware
The rising cost of health insurance premiums has many consumers considering high deductible health plans. Although high deductible plans offer lower premiums, these plans have their faults. Here are some factors you should consider before selecting a high deductible policy.
Assess the Side Effects of a High Deductible
Often, the allure of lower monthly premiums overshadows the realities that come with high health insurance deductibles. According to the post, “More Than 4 in 10 Americans Prefer High-Deductible Health Insurance Plans“, you shouldn’t focus too much on the promises of a low monthly premium. Look closely at the deductible amount of all insurance policies you’re considering.
If you have a medical emergency and require expensive surgery, will you have the cash on hand needed to pay the entire deductible? If not, the better option may be a plan with a slightly higher monthly premium and a lower deductible.
One common side effect of high deductible plans is insured individuals avoiding medical treatments because they don’t want to pay their high deductibles, or don’t have the money on hand to pay it. While you may be healthy now and not require frequent medical treatments, your health can change at any time. Consider which type of policy would be best for you at the time of a medical emergency.
Research the Cost of Co-Insurance
Premiums and deductibles aren’t the only costs associated with health insurance plans. The real difference in price between policies may actually be found in the cost of co-insurance.
A health insurance policy’s co-insurance is the amount you will pay for healthcare services after you have paid your deductible. For example, the terms of your insurance policy may state that the insurance company will cover 70 percent of medical services and that you are required to pay 30 percent of the medical services. This means you would be required to pay 30 percent of all medical bills after your deductible is met. Co-insurance percentages are important to assess when considering policies because these percentages can vary between high premium policies and high deductible policies.
Another cost to consider is a policy’s co-pay amount, which is a fixed amount you pay for a healthcare service. Co-pay costs can vary based on the type of health service and, for some services, you may be required to pay a co-pay and co-insurance.
Know Your Coverage
Don’t let the costs of the health insurance policies overshadow the amount of coverage you need. While knowing how much you can afford to pay for a policy is important, the most important details are the types and amounts of coverage included in a health insurance plan.
The right amount of coverage provides peace of mind and will help ensure you receive the medical assistance you need, when you need it. After you assess the forms of coverage you need, you can then begin to compare the costs of health insurance policies that offer the proper level of coverage.
Understand the Specifics of Health Savings Accounts
A benefit that’s often cited with high deductible health insurance plans is that they also offer insured individuals the opportunity to open health savings accounts. A health savings account does offer benefits, including the ability to use tax-deferred money to pay for health expenses.
However, to receive the benefits of a health savings account, you must commit to putting a portion of your income into the account. If you don’t have the extra funds available to redirect to a health savings account, or you won’t remember to put funds into it, then reconsider this as being a benefit of selecting a high deductible plan.
The sticker shock of a high monthly premium may have you considering a high deductible insurance policy. Before you select such a policy, understand the terms and the potential risks. By being informed, you can select the best insurance policy for your situation.
