Daily News Updates - Health Insurance News

High-Deductibles, Part 1 – Benefits and Risks

High-deductible health insurance plans are becoming more and more commonplace in the workplace. One very nice feature is the popular HSA (Health Savings Account) usually offered as an option. Because this is so strikingly different from the traditional health insurance plans of the past, it is well-worth understanding the opportunities and threats associated with these new schemes. They’re not for everyone, but are very good for many. For example, someone who rarely has medical needs is generally better off with their lower premium costs, in hopes the “big one” never hits. Alternately, if the “big one” does hit and they also have other coverage also, they may be able to coordinate a complementary effect between this health insurance plan and another plan.

Conversely, if a person’s typical annual expense is generally in between the low-deductible and the high-deductible, it may be of advantage to not go with the high-deduct health insurance plan. Premiums for high-deductible plans are typically only about half as mush as other types of comprehensive health insurance. Of course, the plan client must pay for all initial expenses with no reimbursement until after the high-deductible amount is reached. The federal government sets minimum deductible limits for these plans, but it is not unusual for a plan to set a much higher figure. This year the gov’t minimum was $1,100 for a single person plan and $2,200 for a family plan. With some plans, some preventive care is provided for without the deductible.

As stated earlier, these health insurance plans typical offer a very attractive option to help clients cover the much-higher out-of-pocket expenses which can top $3,000 all at one pop in very unfortunate situations (rare). This is the HSA (Health Savings Account). The intent is for clients to prudently contribute to these accounts through payroll deductions. When expenses occur, they can be paid using a “medical debit card”. The real beauty (at least to this point in time) is that they are immediately tax-sheltered. Kind of like an immediate gain of 13% to 20% on the investment (depending on a person's tax base).