Is a High Deductible Health Insurance Plan Right for You

We all know that the premiums for health insurance have been rising far faster than inflation for a number of years now. From individuals to the largest multinational corporations, everyone is looking for new and innovative ways to keep the costs of health insurance under control. While there are a number of ways individual workers can reduce their health care costs, one of the most effective is to eschew traditional PPO and HMO coverage in favor of a high deductible health plan coupled with a health savings account.

As the name implies, a high deductible health insurance plan requires the individual to pay a deductible that is quite a bit higher than normal, often as much as $5,000 or more. The insured is responsible for the deductible; after the required deductible has been paid the plan pays the rest of the costs according to the terms of the plan.

While many workers are put off by the high cost of the deductible in such a plan, there is a cost effective way to deal with that issue. That is by combining the high deductible plan with a health savings account, also known as an HSA. By funding the health savings account individuals will have the funds they need available when they are needed to satisfy the deductible. The money used to fund the account is typically deducted from the worker’s paycheck, making it an easy and relatively painless way to pay for medical expenses.

And since the funds for the health savings account are deducted on a pre-tax basis, funding such an account can lower the individual’s tax liability, resulting in further savings. Those who are able to properly budget their money can enjoy significant cost savings from such an arrangement.

The combination of a high deductible health plan and a health savings account also works well for those whose annual health care expenses are consistent and predictable. When considering such an approach to health care it pays to sit down and calculate the individual’s or family’s health care expenses for the last couple of years. Many people find that the health care expenses they incur are consistent from year to year, and this consistency lends itself well to a high deductible health plan coupled with a health savings account. By budgeting the family’s typical health expenses in a health savings account, workers can enjoy significant savings on their health insurance premiums without sacrificing the coverage they need or experiencing high out of pocket costs.

In the end each individual will need to determine whether or not a high deductible health plan is the right choice. These special health insurance plans have a number of important advantages, including lower premiums, more flexibility and greater control of costs. Those who are comfortable shopping around for their health care needs may find that this approach to health care provides a great many advantages and helps to keep costs under control.