Wednesday, July 24, 2013

High Deductible Health Plans - Is it For Everyone?

With health insurance premium costs that are increasing, high deductible health plans with their lower premiums seem like a very attractive option. But don't be too fast to jump into this option as it is not for everyone.

With high deductible health plans, you pay the everyday expenses such as office visits, prescriptions, and minor accidents until a very high deductible is reached. These plans have an annual deductible that is higher than that in the more traditional health plans. This means the insurance company does not have to pay claims unless something major happens. Because you are paying a higher deductible, your health insurance premiums will be lower than you are used to paying.

The term "high deductible health plan" almost always works together with health savings accounts (HSA's). HSA's are a special kind of tax-advantaged savings account that accumulates as deposits are made, for medical expenses. The policyholder can withdraw money from the HSA to pay for the HDHP deductible and allowable medical expenses.

High deductible health plans are not good for all people. It is for those who can afford high out-of-pocket expenses as the deductibles are high and generally about $1,000 to $2,000. They must be in good health and generally not needing prescription drugs.

Some of these plans have a one year wait before being eligible for maternity care. So, don't plan to get pregnant. Also, don't have any pre-existing conditions, in which case there may be a waiting period as well.

If you decide to go with high deductible insurance, then set up a HSA for your out-of-pocket expenses. Check out first if your employer offers a plan before going to private insurance companies. It is possible that your employer might pay part of your premium.

Shop around and look at multiple quotes and compare the premium cost, the deductible amount, what is covered and the lifetime annual benefit.

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