Choosing Between Low- and High-Deductible Health Plans

When it comes to your health, you shouldn’t have to limit your choices or forego treatment due to your budget. Unfortunately, for most people, money is what dictates the health plan they choose, and sometimes the picked plan doesn’t put health concerns first. Look beyond the premiums and deductibles associated with high- and low-deductible health plans to figure out which option will serve your physical, mental and financial health best.

High-deductible plan

Choosing a high-deductible health plan will allow you to take home more of your paycheck. In exchange, you’ll have a hefty deductible to meet before your insurance benefits kick in.

“According to IRS rules, an HDHP is a health insurance plan with a deductible of at least $1,350 if you have an individual plan (that rises to $1,400 in the previous year) — or a deductible of at least $2,700 ($2,800 in the previous year) if you have a family plan,” reports Investopedia writer Amy Fontinelle. “The plan’s out-of-pocket maximum must be no higher than $6,750 ($6,900 in the previous year) for an individual plan or $13,300 ($13,800 in the previous year) for a family plan.”

Since you’ll be responsible for doctor’s fees, prescription costs and other health-related expenses until you reach your high deductible, an HDHP offers the option of a health savings account. This savings tool allows you to funnel pre-tax dollars into the account, and your HSA may also benefit from employer contributions, according to NerdWallet writer Lacie Glover.

An HDHP is a good option, according to Glover, if your medical expenses are typically low, you’re in good health, are able to pay out-of-pocket expenses with little disruption to your financial responsibilities, and can grow your HSA with regular, significant contributions.

An HDHP is not a good option, warns Fontinelle, if you think the high out-of-pocket expenses will deter you from seeking help from a medical professional.

Low-deductible plan

With a low-deductible plan, you’ll pay more in monthly premiums than with an HDHP, and you might still have a deductible to meet. However, your deductible will be significantly less than one typically associated with an HDHP. Plus, depending on your traditional health plan’s rules, copayments may be required at each doctor’s visit, according to The Balance writer Miriam Caldwell.

“In general, low-deductible plans make health expenses easier to predict — and despite the fact that they tend to have higher premiums, they are still better for many consumers in the long run,” according to Glover.

Since your deductible will be lower, you should have less trouble meeting it, making subsequent doctor’s visits and medical expenses covered by your plan a quicker goal to attain (minus the copayments, if necessary), notes Caldwell. In order to keep expenses more in line with your budget, she recommends patronizing in-network doctors, hospitals, labs and other health-related services.

If you are the parent of small kids, starting a family or thinking about starting a family, have a health condition that requires regular doctor consultations, are on a costly prescription regimen, need reparative surgery or your kids are at risk of getting injured on their sports teams, Glover recommends reviewing the benefits of a low-deductible plan.

Premiums and deductibles are just the beginning factors for you to use when deciding on a plan; be sure to take a comprehensive look at your health needs to find a plan that will allow you to best take care of yourself and your family.

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