High Deductible Health Insurance Pros and Cons
A high deductible health insurance plan or HDHP requires that the policyholder takes on the major burden of the costs associated with healthcare in exchange for lower monthly premiums. This type of plan is commonly referred to as a ‘catastrophic’ health insurance plan. An HDHP typically has an annual deductible of $1000 or more and the more the deductible, the lower the monthly premiums are.
In today’s rather uncertain economy, many Americans are considering changing their health insurance policies so that money can be saved. The high deductible health insurance plans have therefore been put in the spotlight as of late because they do offer some rather obvious savings.
Of course, as with many things in life, there are both positive and negative aspects associated with high deductible health insurance plans. We will take a look at both the pros and the cons associated with HDHPs here so you can decide for yourself if this type of health insurance is for you.
The Pros of High Deductible Health Insurance
This type of health insurance can prove beneficial to young people and others who do not have ongoing medical problems and therefore will not need to use their insurance coverage often. It is also a good option for older people who will soon be eligible for Medicare coverage. Older consumers also often have the money available to cover the high deductibles should they need to tap into their insurance.
High deductible health insurance can be of real value if it is used with a well-maintained health savings account (HSA) and if the policyholder is in good health and is willing to deal with both billing issues and his/her own health. High deductible plans are unique in the fact that they are the only types of overage that are compatible with HSAs. Even though it is not required to open an HSA with an HDHP, it is a good option for helping you save money (tax-free) and to steer your own health care monies.
The Cons of High Deductible Health Insurance
The biggest disadvantage associated with high deductible health insurance is the fact that you are taking a financial risk. Meaning that if you do end up needing health care you will have to pay the doctor, lab or hospital bills in their entirety until hit your deductible. If you do not generally have at least $1000 available at all times this type of insurance coverage may not be for you.
If your family is large, the high deductible for each family member may be too much for you to handle comfortably. Even if you choose the lowest, $1000 deductible you will be paying health care bills yourself at the beginning of the year. Another disadvantage is the possibility of you becoming lax with your health care. In other words, since you know you will be paying at least $1000 out-of-pocket, you may put off going to the doctor when you are experiencing medical symptoms or when you are sick. And as you know, early detection and treatment is absolutely essential for serious illnesses.
As you can see, there are both positives and negatives associated with high deductible health insurance. Take the time necessary to weigh the above pros and cons so that you make the correct decision for you.