A comprehensive health insurance plan ensures that you are financially covered for medical expenses for you or your loved ones. With ever-increasing healthcare service costs, selecting a plan that offers adequate coverage based on your unique needs and is affordable is important.
In this blog, we will discuss one of the popular health plans, the high-deductible health plan (HDHD), its merits, demerits, and other significant aspects that may help you to decide whether it is the right plan for you.
What is a High-Deductible Health Plan?
A high-deductible health plan is a type of health plan in which you pay a high deductible for the health services offered to you at lower premiums. If you are relatively healthy and do not frequent hospital visits or use your health insurance often, this plan can be the right option for you.
In recent years, more employers have offered HSHP to their workers. In 2021, nearly 55.7% of workers in the private sector were a part of HDHP. Its premiums are lower than any other health plan, making HDHP among today’s more popular health plans.
In HDHP, the deductible for an individual is a minimum of $1,400, and for a family, it is $2,800. The plan has a network of healthcare services provided to you. Your preventive care needs may be covered even before you pay your deductible, provided you receive the services from in-network healthcare services and providers.
High-Deductible vs. Low-Deductible Plans
If most of your annual healthcare services are limited to preventive care, HDHP can offer you a wide range of in-network medical services at affordable premium rates. However, if you feel you must be covered for unexpected treatment costs throughout the year, you must select a health plan that has a low deductible that makes it easier for you to pay the amount for the services you may need.
Health Savings Accounts and High-Deductible Health Plans
Enrolment in HDHP makes you eligible for a health savings account (HSA). HSA is a savings account that allows you to deposit pre-tax earnings for medical expenses not covered by your health plan. You or your employer can make contributions to your HSA are limited to a fixed amount each year. Also, the balance amount in the account can be carried forward to the following year.
What Are The Pros of High-Deductible Health Plans?
- Has low premiums that significantly benefit small businesses
- Covers all preventive care in-network services without you having to pay the deductible
- Makes you eligible for the addition of HSA to your HDHP for payment of uncovered health-related services
What Are The Cons of High-Deductible Health Plans?
- High upfront out-of-pocket costs for chronic conditions
- High out-of-pocket costs for coverage of medical emergencies and accidents
- Negatively impacts your health as due to high out-of-pocket costs, you may avoid treatments for your healthcare needs