A high-deductible health insurance plan (HDHP) is an individual health insurance policy with a deductible of at least $1400 ($2800 for family health insurance). The deductible is how much you will pay out of pocket for medical service before your insurance company pays the rest. Essentially, you pay the first wave of expenses up to $1400 and the insurance company takes it from there.
A high deductible plan also includes an out-of-pocket maximum amount that typically maxes out at around $7,000 for an individual plan or nearly $14,000 for a family health plan. So, if you have an individual plan, you will have to no more than $7,000 for health services in any given year under your current plan. The insurance company picks up the rest. Below, we look at the benefits of an HDHP if you are healthy.
What Does It Mean to Be Healthy?
From a health insurance perspective, the term healthy suggests that you use basic medical services such as checkups and file few (if any) major medical claims (surgeries, emergencies, multiple prescriptions). To put it more direct, you are not costing the health insurance company thousands of dollars in health insurance services.
Health insurance companies provide incentives for healthy individuals by offering plans with low monthly premiums. Your monthly costs are more affordable. However, the drawback is that you have to pay a higher deductible if you file an insurance claim. The bottom line: it’s a gamble. You are betting that you will stay healthy and avoid a medical emergency to pay lower premiums and zero deductibles.
Benefits of a High-Deductible Insurance Plan
There are several advantages to taking out an HDHP.
As a general rule, the higher the deductible, the lower the premium. Therefore, most insurance companies give you options for which plan you want to choose depending on how much you can afford out of pocket versus your monthly budget. If you are young and healthy, a higher deductible will give you a lower and more affordable monthly premium.
Health Savings Account (HSA)
Having lower premiums may allow you to allocate money to supplement your current insurance plan. For instance, you could transfer some of your monthly contributions to a health savings account (HSA). an HSA can help you save money fo more expensive services such as surgical care or high-end prescriptions.
Many HDCPs are part of a PPO plan. Unlike an HMO, you may have broader network coverage. A higher deductible may give you more flexibility in choosing your own healthcare providers. Speak with your health insurance broker to find out your options and which providers are available in your network. You can adjust your plan to include your providers.
You may have some bargaining power with your healthcare rates under an HDCP. For instance, your out-of-poccket expenses may be higher, but you can shop around for more providers since you are paying more on the front end. You may get a negotiated rate between the healthcare provider and your insurance company.
Are HDCPs Right for You?
There is no regulation or strict guideline when it comes to HDCPs. Each individual or family must determine if the plan is right for them. When choosing an HDCP, consider the following factors:
- Your overall health
- Your current healthcare costs including prescriptions
- Health insurance plans and providers available in your state
- Your monthly budget
- Your out-of-pocket payout threshold
Even if you are in perfect health, you may not be able to afford a sizable debt if you do not medical care for an emergency or illness. So, make sure you have a game plan for taking care of higher medical expenses should they occur. If you have any questions about your options, cconsult your health insurance broker. They provide valuable advice on what plan you should choose.
Get a Free Health Insurance Quote from Insurance Enterprise
Whether you need individual, family, or group health insurance, you can trust the experts at Insurance Enterprise to find the right plan. Choose from the best providers in your state and save money by finding the right plan. To get started, call 888-350-6605 or fill out the contact form to get a free quote from one of our health insurance brokers.