If you are seeking a new insurance plan, as many are this time of year during an open-enrollment period that typically ends at the end of the calendar year, you’ve likely seen the phrase “High Deductible Health Insurance Plans” or a “High Deductible Health Plan” (HDHP). These are plans that have many pros and cons, and like most insurance policies, will fit the specific needs of specific types of people. 

Health insurance is never a “one-size-fits-all” solution. Let’s take a look at some of the pros and cons of these high-deductible plans.

Pros of High Deductible Health Plans

Many reasons may make an HDHP the right plan for you. Let’s explore what benefits such plans have.

Low Monthly Premiums

The biggest reason many select a high-deductible plan is due to the cost of monthly premiums. Deductibles are the amount of insurance you must pay, out-of-pocket before your plan kicks in for full coverage. In other words, you must spend a set amount on your own. 

You are likely a good fit for an HDHP if you do not anticipate the need for much healthcare. Many younger, single individuals select these plans. Barring a major, emergency, they may decide they’re not likely to visit a healthcare service outside of an annual physical. They are likely not on many or any medications. They simply do not think they’ll need it much, and therefore don’t mind banking on little out-of-pocket cost to get a lower monthly premium.

Tax Benefits with a HSA

Most high deductible plans are compatible with Health Savings Accounts, known as “HSAs.” These savings accounts allow you to set aside funds, tax-free, to spend on healthcare needs. From over-the-counter medications to copays, many take advantage of the tax benefits these plans can offer, especially if you don’t expect to spend much on your healthcare needs.

Cons of High Deductible Health Plans

An HDHP is not the right product for everyone. There are some concerns, depending on your needs, that you should be aware of before purchasing.

High Out-of-Pocket Costs

As the name implies, those with an HDHP are subject to high deductibles. This may mean a large out-of-pocket cost until you reach your deductible. Often, minimums for such plans (meaning the amount may be much higher) are $1,500+ for individuals or $3,000+ for families. This means, that before insurance kicks in, you’d have to pay at least $1,500 (as an individual) for expenses before you have assistance.

One single emergency can cost thousands of dollars, and that can be a costly way to hit your deductible. While you may have a low monthly bill (premium), your coverage, should you need it, is going to be expensive.

Discourages Necessary Healthcare Use

Sometimes, when you know you have to pay a massive amount out-of-pocket, you may be discouraged to go to the doctor, even when it really is necessary. For example, many HDHP plans are ideal for a college student or recent graduate. They are younger and typically need less healthcare visits per year than their older counterparts. 

These same-aged people might decide to put off doctor visits because of the cost. This can lead to dangerous symptoms escalating or treatable conditions not being caught in time. If you do opt for an HDHP, do not fear going to appointments when something is wrong. Your life or overall health may depend on it.

Find the ‘Fit’ For You!

No matter your situation, age, budget, or needs, there is a healthcare plan out there for you. However, it can be difficult to make that choice. You want to be sure you have enough coverage for your needs, but not overspend on monthly premiums. You don’t have to face thousands of dollars in debt because you didn’t select enough coverage. There are loads of pros and cons for all plans.

The best way to find the perfect fit is to work with a professional. I am happy to discuss your healthcare needs anytime, to be sure you are not over or under-paying for the appropriate plan. You can make an appointment with me right online.