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High Deductibles Vs. Low Deductible Health Insurance

Agnus Smith | Published: June 14, 2018

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Updated: September 21, 2018

When shopping for a new health insurance plan, it’s hard for most people to look past what we like to call the “sticker price,” more commonly referred to as your premium. It makes sense to take your premium into account when picking your plan since you’ll be paying it monthly regardless of whether or not you use your benefits, but it should be the only thing you look at.

Your out-of-pocket expenses also play an important role in how much you’ll end up paying for coverage, and can end up costing you hundreds, even thousands of dollars if you’re not careful. While there are a few different out-of-pocket costs to consider, your deductible is often time the most expensive of them all.

Your deductible is the amount of money you have to pay towards your medical bills before your health insurance benefits kick in. It’s important to pick a deductible that fits your needs so you don’t find yourself in financial ruins. If you’re curious as to what kind of deductible you should choose, we’re here to help. Here’s everything you need to know when it comes to high deductibles vs. low deductibles.

Choosing Between High And Low Deductible Health Plans

If you’re looking to enroll in a new health insurance plan, understand that there is not one health insurance plan that is better than another. In fact, the reason there are so many different coverage options available is that everybody has different healthcare needs. What works for you may not work for your best friend or colleague. So, how do you know which plan to choose?

Working with a health insurance agent or broker is probably your best bet at finding coverage that fits your needs and budgets best, but if you’re a savvy consumer, then here are some insider tips to determining if a high or low deductible is right for you.

Factors To Consider

The first thing you want to do is sit down and determine what it is exactly you’ll need out of your health coverage. That means really taking a moment to dive into your current health and financial situation. Ask yourself the following questions:

  • Do you need your policy to cover any pre-existing or chronic health conditions?
  • Do you need your coverage to pay for any prescriptions?
  • Do you have an extensive medical history?
  • Do you rarely use coverage, but want to plan for the worst case scenario?
  • How much can you afford to pay for health insurance?

Answering these questions is your first step to finding out what kind of medical insurance you’re going to need. More importantly, these answers will let you know whether you should opt for a high deductible health insurance plan or low deductible health insurance plan.

Other Out-Of-Pocket Costs To Keep In Mind

There are general aspects of insurance that are important to know. These things can help you to make a better decision about the health care plan you ultimately choose. They are as follows:

  • Premium - The price you pay for your insurance each month. You must pay it even if you don’t use your insurance.
  • Deductible - The deductible is the amount of money you are required to pay upfront for medical care before your insurance kicks in. It excludes preventative care. Once you meet your deductible, the insurance company begins paying a greater portion of charges, which is known as the coinsurance.
  • Copay - The fixed cost of your healthcare expenses you need to pay as according to the terms of your policy.
  • Out-of-Pocket Maximum - This is a cap on how much you must spend on medical care each year. It doesn’t include your premiums if you stay in-network. Once you meet that limit, your insurer pays 100 percent of your in-network services.

Know The Difference: High Deductible Vs. Low Deductible

You’ll typically be able to differentiate between high deductible and low deductible health plans by looking at the sticker price, but there’s a little bit more to it than that. If you still don’t know which type of health insurance plan to opt for, here are the benefits of each.

Higher Deductible Means Lower Premium

The actual amounts are what separates deductibles that are low or high. Those with high deductibles tend to have lower premiums, but out-of-pocket costs that you are required to pay are usually as high as $5,000 and sometimes even higher. Monthly premiums for these plans are lower than those with lower deductibles.

The type of healthcare plan you choose can also affect eligibility for a health savings account (HSA). Generally, only those with high deductibles can contribute to an HSA, which is tax deductible.

The biggest reason to opt for a plan whose deductible is high is if you have the money to be able to afford to pay for the deductible upfront or can pay for unexpected high medical costs, you’re extremely healthy and you can easily contribute significant money toward an HSA every month.

Higher Premium Means Lower Deductible

Plans with low deductibles make it easier to predict your healthcare costs. Although their premiums are higher, they end up saving you money for the long term. Those who would benefit most from this type of health insurance deductible include pregnant women, women planning to become pregnant or those who have young children, people 65 or over, individuals with chronic health conditions who frequently visit the doctor, someone who takes several prescription drugs or one very pricey drug, individuals planning on having surgery to repair a body part like a knee or hip and individuals who perform certain activities, such as sports, that carry a high risk of injury.

No matter what, when you are choosing insurance and are uncertain as to which type of health insurance deductible to get, you should remember that if you cannot afford to pay your monthly premiums, you are at risk of losing your insurance. In addition, you can face a penalty if you don’t have insurance. It’s wiser to sign up for a plan with a deductible that is high than lose your coverage and later come face-to-face with a sizable bill.

At the end of the day, the insurance you choose is a personal choice based on your health care needs and financial situation. However, it’s important to have health insurance for preventative care and in the event that you fall ill or get injured.

Making Your Decision

Still confused as to whether a high or low deductible health insurance plan is right for you? Here’s the easiest way to simplify it. If you are young, healthy, and have a some money saved up, your best bet would be to opt for a higher deductible plan. If you are older, living with any pre-existing or chronic health condition, you should choose a lower deductible plan.

They do have plans that fall in between as well. So, if you are someone who can’t make the decision, or are healthy but don’t like taking risks with your finances, then there are plenty of coverage options available that offer affordable premiums without having to pay high deductible in case anything happens.

Find The Right Deductible With FirstQuote Health

By now, you already know what you need from coverage which means it’s time to take the next step. Health insurance plans vary in cost and availability depending on the area in which you live, which can make shopping for a new plan a bit more difficult. That’s where we come in.

FirstQuote Health let’s you find and compare high and low deductible plans in your area by entering your zip code. You can also talk to an experienced agent or broker who can point you in the right direction. Get started and get covered as early as today.