Medicare Open Enrollment Ends In




November 2011
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Open Enrollment: Is High Deductible Health Insurance the Answer?

With health insurance benefit costs going up, up, up, we’ve been getting lots of questions about whether high-deductible health insurance plans are really an option for most families. High-deductible health insurance plans (sometimes called, “catastrophic health insurance” or “major medical”) have been becoming more and more popular as an option for working families, we thought that we would devote today’s blog to what exactly high-deductible plans are and whether they might be a good fit for you and your family.

High-deductible health insurance is health insurance that is designed to protect in the event of … well, a catastrophe. High-deductible health insurance plans charge relatively low monthly premiums, but require a high deductible to be met before coverage begins. In other words, if you get high deductible health insurance, typically you will pay for your routine check-ups, doctor’s visits and prescriptions out of your own pocket, but you will be covered for your medical costs in the event of medical catastrophe.

Once you have met your annual deductible, your high deductible health insurance plan will cover the major medical expenses that it deems medically necessary, such as surgeries, hospital stays, intensive care, tests, and prescription drugs. Like traditional plans, catastrophic plan designs usually include co-insurance and a maximum out of pocket limit.

Buying into a high-deductible health insurance plan inevitably involves risk. If you develop a chronic condition while you are on a high-deductible plan, you will be on the hook for the related out-of-pocket expenses which may be significant. In addition, if you try to move to a more traditional health insurance plan afterwards, that condition is now likely to be considered a pre-existing condition which will make finding affordable comprehensive health insurance very difficult.

In short, you may be a good candidate for high-deductible health insurance if:

You Are Healthy. If you typically have minimal healthcare expenses, the combination of low premiums and what you expect to pay out-of-pocket is less than the premium cost of a more comprehensive plan.

You Have Some Money in the Bank. If you have a catastrophic health plan, even though the monthly premiums are low, you need to be prepared to pay the high deductible in the event you do become ill before the plan begins to cover your costs.

You Are Comfortable with the Risks. High-deductible health insurance hedges your bets in case a major medical catastrophe occurs, but as we mentioned above, if you do develop an ongoing medical condition, you will be on the hook for your out-of-pocket medical expenses.

You are probably not a good candidate for high-deductible health insurance if:

You Have a Condition that Requires Ongoing Care. If you have a condition that requires ongoing care, the out-of-pocket expenses that you will have to pay on an annual basis with a high-deductible plan may mean that a more comprehensive plan is a more cost-effective option.

You Don’t Have Money in Case of an Emergency. Since high-deductible health plans require you to meet a high deductible before coverage kicks in, you need to be prepared to spend thousands in medical expenses before your coverage begins. If you don’t have access to that kind of money in the event of an emergency, you should consider other options.

You Don’t Like Risk. Anyone purchasing a high-deductible health plan needs to be comfortable with the idea that they could be on the hook for meeting the full amount of their deductible in the event of a medical emergency. If you are not, you should really think about going with more traditional, comprehensive health insurance.

Keep in mind, though, that even if you aren’t an ideal candidate, if you can’t afford other health insurance, a high-deductible plan is still better than nothing! High-deductible health insurance will offer some relief if you are diagnosed with a major illness or are the victim of an accident, and if it is all you can afford, it will help.

Do you have a high-deductible health insurance plan? Tell us about it!

Related posts:

  1. High-Deductible (Catastrophic) Health Insurance Plans: What Are They? Are They Worth It?
  2. High-Deductible Health Insurance Follow-up: High-Deductible Health Insurance and Health Savings Accounts
  3. Americans on High-Deductible Health Insurance and HSAs Jumps
  4. Healthcare Reform: Health Savings Accounts (HSAs) and High-Deductible (Catastrophic) Health Insurance
  5. Cost of Health Insurance Benefits Up 9%, Employees Turn to High-Deductible Plans

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