What is high deductible health insurance?
A high deductible health insurance plan lets the policyholder pay lower premiums each month while also paying for routine healthcare costs themselves. Once they have reached their deductible amount for the year the insurance pays for everything after that.
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How does high deductible health insurance work?
Many people are used to a copay health insurance plan and can find a high deductible health plan a little too different at first. Since this type of plan has a higher deductible than most, it has lower premiums.
A premium is the amount that the policyholder has to pay each month for their insurance. The deductible is the amount the policyholder has to pay before the coverage starts to pick up the cost. This plan is a good choice for someone that does not want to pay a large bill each month for health coverage.
The policyholder takes responsibility with the cost of more routine care like annual doctor visits and getting flu shots. Once their deductible has been met, the insurance coverage kicks in and pays for most things completely the rest of the year. There are certain things that might require a copay.
This type of coverage is often referred to as catastrophic health insurance because it includes a form of comprehensive coverage for serious injuries and illness. Therefore, if someone is in relatively good health and they still want thorough coverage in case of a major medical emergency, this type of coverage might be the perfect choice for them.
What is a health savings account?
A health savings account combines a high deductible health insurance plan with a special savings account. The way this type of plan is supposed to work is that the policyholder takes the money that they saved on the monthly premium and put it in the savings account.
This account is typically tax-free and acquires more interest than a regular savings account. The policyholder then uses the money saved in this account to help pay the costs of the routine medical care they are responsible for until their deductible is met.
At the end of the policyholder’s deductible year the money still in the account is
rolled over into the next year and continues to collect interest. This type of high deductible plan gives the policyholder a bit more control on how they spend money on healthcare.
What are the benefits of a high deductible health insurance plan?
The most obvious aspect of this type of plan that people are drawn to is the low monthly premiums. For people that have to buy their own health insurance can get very expensive especially if they are purchasing coverage for their entire family and not just themselves. This type of plan can work into someone’s monthly budget much easier than many other plans.
Even though the policyholder does have to pay for certain things themselves many people do like knowing that if something major happens the comprehensive coverage this plan offers will be there to cover their costs. Even if the deductible has not been met yet and the policyholder does have to pay the deductible quicker than expected, it will still cost them less than if they had to pay for all of the costs on their own.
What are the drawbacks of a high deductible health insurance plan?
While many people like this type of health insurance plan it also has its fair share of critics. This type of policy is most often chosen by people that do not have the expendable income to spend on a plan with a lower deductible because they have higher premiums.
Since they have to pay so much on their own a person with a high deductible plan is less likely to go to the doctor until there is something wrong. So instead of paying for regular checkups on their own they often wait until there is a true medical issue. The problem with this is that the regular check up could have prevented the serious issue all together.
Critics claim that by causing people to skip preventative care this type of plan will actually cost the health insurance industry more in the long run when they have to pay for treatment of conditions that could have been caught early on.
Finding good information on medical related subjects can often be difficult. Websites like http://www.nih.gov are an excellent resource for reliable information.
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