What Is High Deductible Health Insurance?

High deductible health insurance
••• What IS High Deductible Health Insurance?. Last Resort/DigitalVision/Getty Images

A high deductible insurance plan is a more affordable option when you are considering health insurance. These plans offer lower monthly premiums. However, they usually do not cover well childcare or well visits until you have reached your annual deductible. Then the insurance coverage kicks in, usually at one hundred percent coverage.

How Does a High Deductible Health Insurance Policy Work?

The high deductible policies usually range from $1000.00 to $5000.00. You may find insurance plans with an even higher deductible. You can open a health savings account if you have a high deductible health insurance plan. This account allows you to contribute with tax advantages, and you can roll the money over from year to year. If you take out a high deductible policy, you need to open the health savings account at the same time. You should work to contribute the amount of your deductible each year, so you will have money to cover your medical expenses.

 Although it may sound similar to flexible spending account, they are different from each other

What Are the Advantages of a High Deductible Health Insurance Plan?

The main advantage of the high deductible plan is that the monthly premiums are lower. This will give you protection in the event of a catastrophic health event and help you avoid the penalties that are currently in place under the Affordable Care Act. If you are healthy and health insurance seems like too much money, this may be your best option. You can set aside money to cover your deductible and everything should be covered once you meet it. Avoid using a hybrid plan that has high deductibles and then copayments once you have met the annual deductible.

This may be your best option in you are on a tight budget

What Are the Disadvantages of High Deductible Health Insurance Policy?

The downside to a high deductible insurance plan is that you are responsible for paying everything out of pocket until you reach your deductible. You will pay a hundred percent of the cost of prescriptions, doctor visits, and emergency room visits. You will also pay for the cost of surgeries and out patient procedures. If you are considering a pregnancy, you need to check if there is maternity coverage on your policy. You can work on saving on your medical care by shopping for more affordable health care.

When Should I Get a High Deductible Health Insurance Policy?

You may consider a high deductible plan if you are pretty healthy and rarely go to the doctor. It is a good option if you need to cut expenses, but you should be sure to begin setting aside the $5000.00 so that you can cover your side of expenses. This is a better option than going without health insurance at all. It can make it easier to make difficult decisions when you are sick, because you know that your care is covered.

How Do I Choose Between a Traditional and High Deductible Policy?

Your employer may offer a high deductible option or a traditional health insurance option. If they cover the entire cost of the premium, it may be easier to handle the budgeting with the traditional health insurance option, but if you have to pay for the premium yourself you should carefully weight the total out-of-pocket costs for both policies and then make your decision on the option that is more affordable. If you are self employed, you may choose this plan because the premiums will help you save money.

Health insurance is one the things you should never cut from your budget. The risks are not worth potential savings. You should cut all fun and luxury items from your budget completely before you stop carrying health insurance. A high deductible plan will make it easier for you to maintain health insurance.

Will a High Deductible Policy Qualify Under the Affordable Care Act?

The Affordable Care Act has set up specific requirements that each policy has to meet in order to avoid the fees with no insurance. The insurance through your employer should meet these requirements. Additionally, if you go through an independent insurance agent, he should be able to help you find a policy that will meet the requirements.