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Choosing a High vs. Low Deductible Health Insurance Plan

Is a high deductible or low deductible health plan right for you?

Key Takeaways:

Typically you will be choosing between high and low health insurance deductibles, and each has benefits and drawbacks that may or may not be right for you.

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Most consumers find it difficult to see past what we like to call the “sticker price,” also known as your premium, when searching for a new health insurance plan. Considering your premium when choosing a plan is understandable because you’ll be paying for it monthly, regardless of whether you use your advantages. Still, it shouldn’t be your only consideration.

Your out-of-pocket expenses are another factor in how much you’ll pay for coverage, and if you’re not careful, they may add up to hundreds, if not thousands, of dollars. While there are a variety of out-of-pocket expenses to consider, your deductible is usually the most costly.

The amount you must pay toward medical expenditures before your health insurance benefits kick in is your deductible. Choosing a deductible that meets your needs is critical to avoiding financial catastrophe. If you’re unsure which type of deductible to select, we can assist you. Here’s everything you need to know when it comes to large deductibles vs. low deductibles.

Things to Consider

The first thing you should do is sit down and figure out exactly what you’ll need from your health insurance. This necessitates a thorough examination of your present health and financial position. Pose the following questions to yourself:

  • Whether or not you want your coverage to cover pre-existing or chronic illnesses.
  • Is it necessary to use your insurance to pay for any prescriptions?
  • Do you have a lengthy medical background?
  • Do you rarely use insurance but want to be prepared if the worst happens?
  • What is the maximum amount of health insurance you can afford?

Answering these questions is the first step toward determining what medical insurance you’ll require. More significantly, these answers will help you decide whether you should get a high-deductible or low-deductible health insurance plan.

Comparing Out-of-Pocket Costs

There are several general features of insurance that you should be aware of. These factors can assist you in making a more informed decision regarding the healthcare plan you finally select. The following are the details:

  • The monthly premium is the amount you pay for your insurance. Even if you don’t utilize your insurance, you must pay it.
  • The deductible is the money you must spend out of pocket for medical treatment before your insurance kicks in. Preventative care is not included. Once you’ve met your deductible, coinsurance kicks in, and the insurance company pays a larger share of your bills.
  • Copay - You must pay the set cost of your healthcare expenses according to your policy’s terms.
  • Maximum Out-of-Pocket Expenses - This is a yearly limit on how much you must spend on medical care. If you stay in-network, it does not cover your premiums. Once you’ve reached that threshold, your insurer will cover 100% of your in-network services.

Differences Between High Deductibles vs. Low Deductibles

You can usually tell the difference between a high deductible and a low deductible health plan by glancing at the sticker price, but there’s a little more. If you’re still undecided, here are the advantages of each type of health insurance plan.

High Deductible Health Plan Basics

A high deductibles health plan vs low, as the name suggests, has a higher deductible that must be reached before your plan insurance kicks in for anything other than in-network preventative care services. Any plan with a $1,400 or more deductible is considered a high-deductible plan. Individual coverage costs $2,700 or more, and family coverage costs $2,700.

High-deductible plans often have higher out-of-pocket maximum limits, but once you hit that limit, the insurance pays 100% of the permissible amount for the rest of the year. In 2021, the annual out-of-pocket maximum for individual policies cannot exceed $7,000 and $14,000 for family plans, eliminating out-of-network services.

Low Deductible Health Plan Basics

Low-deductible health insurance plans have a smaller deductible, which means you pay less money upfront when you become sick before your insurance kicks in. When you have low-deductible coverage, the trade-off is that your monthly premium will be higher.

The obvious disadvantage of these plans is that you’ll have wasted your money by paying a higher monthly premium if you don’t require more comprehensive medical care. On the other hand, low-deductible plans make controlling and forecasting healthcare costs easier if you get a serious sickness, are wounded, or require surgery. Because the deductible is lower, there is no significant out-of-pocket expense to be concerned about. Even yet, preceding a cheaper monthly premium in exchange for a smaller deductible implies preceding something else.

Which Plan to Choose

Are you still undecided about whether a high-deductible or low-deductible health insurance plan is best for you? Here’s the simplest method to do it. If you are young, healthy, and have some money set up, a higher deductible plan is the best option. You should choose a lower deductible plan if you are older and have a pre-existing or chronic health condition.

Health insurance policies vary in price and availability based on where you reside, making it more difficult to shop for a new plan. By entering your zip code, you can find and compare high or low deductible health insurance plans in your area with FirstQuote Health. Get started and covered as soon as possible.

Frequently Asked Questions

Are High Deductible Plans Good?

High deductible plans are good because they have low premiums. If you are healthy and don’t anticipate spending much on healthcare, this plan is an appropriate one.

Why Should You Choose a High Deductible Plan?

Yes, while you will pay a higher deductible with these plans, you will pay a cheaper premium. If you remain healthy and never have to reach your deductible or maximum out-of-pocket limit, that’s a benefit. Another significant benefit of high-deductible insurance is the availability of a health savings account (HSA) to manage healthcare costs.

What is a Reasonable Deductible for Health Insurance?

This year, the average deductible is $1,655. That implies the average American will have to spend up to a certain amount until their insurance begins to cover their expenses. Of course, if you haven’t got any serious medical problems, you may be able to save money.

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