Here’s all you need to know about high deductible health plans

By: | Published: February 9, 2017 5:22 PM

If you have been keeping yourself abreast of the happenings in the insurance sector, you must have come across the term called ‘high deductible health plans’. Today, we are going to learn all about it right from the concept to its features and then the pros and cons.

High deductible health plans have been getting a lot of coverage lately majorly because of their low premium amount. It might seem as luring but there are several other factors that ought to be considered. High deductible health plans have been getting a lot of coverage lately majorly because of their low premium amount. It might seem as luring but there are several other factors that ought to be considered.

If you have been keeping yourself abreast of the happenings in the insurance sector, you must have come across the term called ‘high deductible health plans’. Today, we are going to learn all about it right from the concept to its features and then the pros and cons.

High deductible health plans have been getting a lot of coverage lately majorly because of their low premium amount. It might seem as luring but there are several other factors that ought to be considered. In such type of health plans, the deductibles are way too higher. A study has shown that one out of three large employers is offering high deductible health plans to cut down the healthcare costs. The reason why such plans lower the healthcare costs is mainly because the employees and their families do not go for medical services that often.

The concept behind it all
The working of a highly deductible health plan is rather very simple. It involves the client assuming all the expenses till the time a pre-fixed deductible amount has been incurred. For instance, if someone has a deductible of Rs 1500 on their health plan, they take all the responsibility for the expenses until the amount has been met. Any sort of expenses that are greater than the deductible amount will be covered as part of the health insurance plan. Since the deductible has been set at a lot higher rate than the usual health plans, it is labeled as ‘high’. The insurer will provide a cover for the remaining medical expenses after the said amount of deductible has been spent.

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What’s more?
One should keep an eye out for one’s health savings account when having a high deductible health plan. When coupling both these accounts, one will have to understand that this is supposed to be used to put aside pre-taxed money so that they can be sued on medical expenditures. The money that is put in such savings account can not only be used to meet the medical expenses when the need arises, but also for other investment options. However, one must not forget that any amount of money that is not used for medical reasons will be taxable.
High Deductible Health Plans – Pros

Lower amount of premiums
As mentioned multiple times, high deductible health plans come with meager amount of premiums. This implies that one can save funds to pay for high deductible if the need arises in the future. First introduced in the year 2004, these plans became a popular method for people to save money every month on their health coverage, instantly. Also, these plans bring down the monthly medical costs substantially.

A boon for youngsters
Usually, youngsters don’t care for health insurance plans which is certainly not a good thing to do. In such a scenario, to ensure that they are able to take financial responsibility when something unfortunate happens, they should go for high deductible health plans. It would provide them adequate coverage and save them from burning a hole in their pocket.

Protection against unnecessary benefits
High deductible health plans are also advantageous when it comes to avoiding wasting money on benefits that one would not use likely.

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High Deductible Health Plans – Cons

Not meant for people with frequent need of attention to their health
If someone is dealing with a health condition for a long time or requires medical attention quite often, they can’t go for a high deductible health plan. The reason behind it is the constant requirement to meet the high deductible limit which also means paying for the medical expenses out of their own pocket. In this case, one needs coverage with a lower deductible amount to lower the payment obligations.

Premiums can increase
We all know that a high deductible health plan is attractive because of the low premium amount. But these can increase over a period of time. As the monthly payment increases, such plans cease to beneficial. To combat, one should gain an idea about how the premium rates will rise before going for a high deductible health plan.

Ignoring such a plan
One of the most common drawbacks of choosing such plans is that people avoid using it to save themselves from paying a deductible. It concerns those people who avoid seeking medical attention even in important health situations. It’s quite simple to understand. If one postpones taking one’s car to a mechanic for smaller problems, they will definitely face bigger problems due to their avoidance.

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Is a high-deductible health plan right for me?
Coming to a conclusion is quite easy as there are different factors involved. All one has to do is keep in mind one’s need and the pros and cons for informed decision-making.

(The author is CEO & Founder, PolicyX.com)

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