What are High Deductible Health Insurance Plans?

Open enrollment—the window during which you can sign up for health insurance or make changes to your current plan—begins November 1st. That being said, you’ll have to go through a lot of jargon before you can make some very important financial decisions. One of the terms you may come across is high-deductible health plan, or HDHP.

IN recent yearsThere has been “a rise in high-deductible plans that offer lower monthly premiums but require consumers to pay more of the initial medical costs out of pocket before plan coverage kicks in,” it said. Washington Post. This is likely because the “cheaper premiums” on these plans may look like a bargain at first glance, but you “run the risk of paying much more” if you have “unexpected illnesses or haven’t been able to budget well for more regular treatment”. Read on to learn the possible risks and benefits of choosing an HDHP.

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Another drawback is that the high cost of primary care associated with HDHP can “lead to worse health outcomes” as some people “avoid seeing a doctor because of the cost,” Experian says. Even if people end up getting treatment, they “may put off routine treatments and screenings until later in the year, after they incur other health care costs to meet their deductible,” the Post reports. This approach may be “particularly risky for those with chronic conditions such as heart disease and diabetes, potentially leading to missed opportunities for earlier intervention.”

Some people choose HDHPs and this is because they offer several benefits. First, “in exchange for a higher deductible, you typically pay a lower premium,” he said. USA today. As for how much lower, the Kaiser Family Foundation “reports that the average employee premium for an HDHP with a Health Savings Account in 2021 was $95 per month for an individual plan and $393 for families, compared with premiums of $110 and $525.” dollars accordingly.” for plans with lower deductibles.”

Another benefit is access to an HSA, or health savings account. These accounts “allow you to set aside pre-tax money to pay for qualified health care expenses, including deductibles, coinsurance and many other health care benefits,” USA Today reports. Plus, according to Experian, “your funds can grow tax-free, and you can withdraw them tax-free if they’re intended to cover certain medical expenses,” which “could save you hundreds of dollars.”

For example, Experian says, choosing a high-deductible plan “may make sense” if you are “young, healthy, single and have no dependents,” you “rarely visit the doctor” or “are in good financial health.” form” allowing you “to pay your medical expensesIt also might help if “your employer contributes to your HSA at a level that covers most, if not all, of your plan’s deductible.”

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What is a high deductible health insurance plan?