Should You Get A High-Deductible Health Insurance Plan?
If you buy your own health insurance, you may be able to lower your premiums with a high-deductible plan. These individual health insurance plans have some advantages but aren't for everyone. You may be better off paying a higher premium with a lower deductible plan. Keep reading to learn more about high-deductible health insurance plans and their advantages and disadvantages.
What Is a High-Deductible Health Insurance Plan?
A deductible is an amount you need to pay before you receive any services (except for some preventative services). A high-deductible plan is one where you have to pay a high dollar amount before services start. The IRS sets the definition and the dollar amount for what is considered a high-deductible plan. These deductibles can be up to thousands of dollars. You would not receive most services until you meet that amount.
What Are the Advantages of a High-Deductible Plan?
High-deductible health insurance plans have two distinct advantages that make them attractive. For one, you will pay less per month than other plans. If you stay healthy, you will save more over the year. If you are healthy and don't usually see a doctor, this could be an advantage to you. These plans could still come in handy if you are in an accident or suddenly get seriously ill.
The other benefit of high-deductible plans is you can receive significant tax savings when you pair it with a health savings account. A health savings account is an account where you set aside money only for health expenses. You can withdraw the money tax-free for those expenses. You can also use it to save for retirement. The money you put in this account can lower your tax burden.
What Are the Disadvantages of a High-Deductible Plan?
If you have a chronic health condition or expect to need regular health care, these plans have disadvantages. For example, this plan may not be right if you are pregnant, have asthma, or need several medications. It also might not be good if you or your family members engage in risky activities like sports. You would have to pay out-of-pocket for most routine non-preventative health care. You should also reconsider having this plan if you don't have the money to cover the deductible.
For many people, a high-deductible health insurance plan is a perfect choice. To determine if it's the best for you, look at your current health situation and expenses. For some people, a different plan may be a better choice. Talk to your individual health insurance provider if you have questions about enrolling in an individual health insurance plan.
For more information on individual health insurance, contact a company near you.
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