Can A High Deductible Health Plan Work For Me?

By Brock Timberman

There is no topic that is more discussed and widely debated than that of health care. This is an issue that affects every single person no matter what race, color, creed, or background. Choosing a health care plan for you and your family is an extremely important and complicated decision often requiring hours of reading and research to find the rate coverage. Lots of words and phrases get thrown around in terms of health care, but High Deductible Health Plan is one heard very often. What is a high deductible health plan? What are the advantages and disadvantages of having one? Let's take a look at these types of plans and find out exactly what they are all about.

Often called consumer driven insurance, a high deductible health plan is a plan with high deductibles and lower premiums for major care like surgery and hospital visits. The advantage to this is of course the lower premiums. How much is a high deductible? It can be $1,000 and higher for individuals, and several thousand dollars for families. You are probably asking yourself, 'Why would I want to risk these high deductibles if something bad happens to be or a member of my family?' There a relatively simple answer for this. At this same time that you enroll in a high deductible insurance plan, you would enroll in a Health Saving Account or HSA. Generally, a person would open this account and immediately put the amount of the deductible into this account, and this money is not taxed.

Wow. As long as the money in the HSA is spent on health care, it is not taxed. However, if the money is taken out and spent on anything else it is taxed. Some high deductible health care plans require that you have an HSA set up, and others do not.

In the case of some HSAs, you have to spend all the money in the account each year. Some HSAs allow you to rollover the money each year. This is obviously an advantage.

In a high deductible plan routine visits to the hospital are not part of the deductible nor are things like prescriptions. These of course are paid out of the HSA and those dollars are not taxed. The idea behind a high deductible health plan is for a person to save money on high premiums. However, if something bad happens, that money in the HSA will disappear quickly. Having a plan like this is a bit of a gamble for the consumer.

The best bet is to have an HSA along with your high deductible plan, be relatively young and healthy, and be earning a decent income. Studies have found that people with low incomes are not good candidates for high deductible plans. Often times people put off going to the doctor because they can't pay their deductibles. The high deductible plan protects the person that has a considerable amount of assets. People who have the money to open an HSA can protect themselves from high medical costs without having to dip into their other assets or that retirement fund.

Employers are obviously big fans of these high deductible plans. It saves them money. You must ask yourself if one of these plans is right for you and can work well in your situation. Remember, until you reach that high deductible mark each year, you are spending your own money on health care. The idea is that you will have more questions for doctors and hospitals before you allow them to perform expensive procedures. This of course can be a double edged sword. Are you the best person to make this call, or is your doctor? These are the questions you need to ask yourself.

There are thousands of options out there for high deductible plans and health savings accounts. Here are a few companies that offer such plans. Do your research and figure out which one is right for you. Plans vary from state to state, so know exactly what you are getting into.

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