Whether you're an employer or an individual, you might consider high deductible health plans (HDHPs). These lower-cost options are becoming more popular, especially those with tax-advantaged savings accounts.
HDHPs typically offer 100% coverage for preventive services in their network before you meet your deductible. However, there are a few things to keep in mind when choosing one.
1. Deductibles
High deductible health plans are an increasingly popular choice for many workers. They typically have lower monthly premiums than traditional insurance plans, and often include a tax-sheltered health savings account (HSA) to help pay for medical expenses before the deductible is met.
Deductibles are designed to reduce the cost of health care by making consumers more price conscious about what they pay for services. This may encourage patients to use less expensive care or avoid unnecessary care altogether.
Depending on how well you budget your healthcare costs, a high deductible health plan might be a good fit for you. However, you need to carefully weigh the pros and cons before deciding whether a high deductible is right for you.
2. Copays
Copays are a fixed amount that you pay when you go to the doctor or get a prescription filled. This is the same for most health insurance plans.
You can find out more about how they work by reading the plan’s benefit booklet, which will include a list of copay amounts.
High deductible health plans (HDHPs) have higher monthly premiums than co-pay plans, but you can save money by having lower out-of-pocket expenses. Whether this type of plan makes sense for you depends on your life stage and how much you’re likely to spend on healthcare services.
3. Coinsurance
Coinsurance is a way to share the cost of healthcare with an insurance company. It begins after you meet your deductible and is a percentage of the total amount of each service.
A higher coinsurance percentage means you’ll have to pay more out-of-pocket. However, this can be an effective way to save money if you don’t often need medical care or are healthy.
Coinsurance isn’t an ideal option for everyone, especially people with chronic health conditions or those who require frequent prescription medications. It can also mean you’ll have to pay more for hospital stays or childbirth.
4. Out-of-pocket maximums
HDHPs have out-of-pocket maximums that limit the total amount of money you can spend on medical services in a year. Once you’ve reached this limit, insurance will cover all eligible medical costs in full.
This can be a good way to help protect you from costly health care expenses, and it may even help reduce your premiums in the long run. However, it’s important to remember that you’ll have to pay your deductible and copays again for any medical expenses that occur after your out-of-pocket maximum is met in a given year.
Also, many preventive visits and screenings are covered at no cost by HDHPs. These are important to your overall health and wellbeing, helping you avoid disease or illness. Contact your doctor or primary care clinic to learn what types of preventive care are covered under your plan.
5. Preventive care
Many high deductible health plans (HDHPs) cover preventive care at 100% until your deductible is met. These services can include one annual physical exam, immunizations, screenings and other preventive medical procedures that you should get every year.
HDHPs may also have lower premiums than other types of health insurance, which means you don't have to pay as much out of pocket each month. Some plans even offer an optional health savings account (HSA), which is money you can use before taxes to pay for certain healthcare expenses. But if you choose an HDHP, you should know that the high deductible may cause you to neglect medical care or skip doctor visits, which could be a mistake in the long run. Avoiding healthcare costs can lead to more serious health issues, higher medical bills and other problems.