A high deductible health plan is an unusual insurance plan that offers the potential for very low insurance premiums. The way it works is that you must pay a high out of pocket deductible and in exchange your health insurance premiums will often be lower than what you would pay for standard health care insurance. The deductible can be anywhere from $1000 to $10,000 depending on the plan that you choose. Because of this, these types of insurance plans are often paired with a health savings plan which allows policy holders to put tax deductible money into a special savings account just for medical costs.
As you can imagine, this type of insurance is not for everyone. People with chronic diseases or small children are probably best served with a standard insurance policy. However, there are some people and situations for which a high deductible health plan may be ideal. If you are a person who is unable to secure regular insurance because of a preexisting condition then an HDHP may be better than nothing. Although you will pay out of pocket until you have fully paid your deductible, you will be protected should something catastrophic happen such as an accident.
This is another reason a high deductible health plan may be a good investment for certain people and situations. If you experience a major medical problem that causes you to be hospitalized or incur large medical debt then you will only be responsible for the deductible amount and maybe a coinsurance percentage. For example, say your spouse gets into an accident that causes you to incur $25,000 in medical bills. If your deductible is $3,000 then that is all you are responsible for. The insurance company will pick up the other $22,000 that is due. This is a simplified example, of course, and may not describe your specific plan.
People who are relatively healthy can also benefit from a high deductible health plan for this very reason. While you will pay out of pocket for your medical coverage, you will be protected should anything really terrible happen to you. So instead of paying hundreds of dollars in premiums for full coverage insurance you won’t use, you pay a fraction of that amount and still are covered in an emergency. These are just a few ways this plan is appropriate. Consider your life situation and all your options to determine if it is right for you.
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