If you’re like most Americans, you probably have a high deductible health plan (HDHP) as one of your health insurance options. HDHPs are growing in popularity, but many people wonder whether or not they’re right for them and their families. The truth is that HDHPs can be great insurance options, but they aren’t always the best choice depending on your specific situation and needs. Wait, right now you will be wondering what to do when it comes to choosing the right health care system, so is a high deductible health plan right for you? In this awesome article, we are going to answer this question.
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What’s a high-deductible health plan (HDHP)?
A high-deductible health plan (HDHP) is a type of health insurance plan that has a higher than average deductible. This means that you will have to pay more out-of-pocket costs for your medical expenses before your insurance company begins to pay its share. However, HDHPs typically have lower monthly premiums than other types of health insurance plans. They also may come with an HSA or HRA attached, which can be helpful in offsetting some of the cost of your deductible. If you don’t expect to incur many medical expenses in the coming year and want to save money on monthly premiums, an HDHP might be right for you.
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What are the pros and cons of HDHPs?
There are pros and cons to having a high deductible health plan. On the one hand, you may save on your monthly premium. However, if you have an unexpected medical event, you may have to pay more out-of-pocket until you reach your deductible. Additionally, HDHPs typically have lower maximum out-of-pocket limits than traditional health plans. This means that if you have a major medical event, your total costs could be higher with an HDHP. In addition, some HDHPs will only cover preventive care or certain types of prescriptions. Finally, there is no guarantee how much money your insurance company will reimburse you after paying off your deductible (i.e., post-deductible benefits).
When do you make sense with an HDHP?
You might want to consider an HDHP if you are:
- In good health and don’t need much medical care.
- Able to pay out-of-pocket costs up to your deductible.
- Willing to shop around for the best prices on medical care.
- Want to save money on premiums while paying more when they actually need it?
The benefits of a high deductible plan include lower monthly premiums, large savings if there is no catastrophic event, and the opportunity to contribute funds to an HSA or FSA. The drawbacks include paying more upfront when services are used (although this may be mitigated by using a health savings account), as well as not having coverage until after you’ve paid significant amounts of your own money. Your premium will go down the more money you put in your deductible because the insurance company won’t have to use any of its shares.
So before signing up for an HDHP, think about whether this will work with your budget and how much risk you’re willing to take.
Other alternatives to HDHPs
If you’re not sure if a high deductible health plan is right for you, there are other options to consider. For example, you could get a health savings account (HSA) compatible plan, which would allow you to set aside money tax-free to cover your deductible. Alternatively, you could get a traditional health insurance plan with a lower deductible. Or, you could self-insure by setting aside money each month to cover unexpected medical expenses.