A high deductible health plan (HDHP) is basically a plan that has a higher deductible than a traditional insurance plan. While the monthly premium is lower, you do have to pay more health costs out of pocket before your insurance pays its share. As these are increasingly being offered by employers, what are the potential advantages and disadvantages of such a scheme?
List of Advantages of High Deductible Health Plans
1. You pay lower premiums
According to Towers Watson, three-fourths of employers now offer HDHPs – this is up 53% from years ago. Even if employees do not want such a plan, they might not have any choice. But the bigger question is why would anyone opt for an insurance policy that makes you pay a bigger amount? Well, plans such as the HDHP offer lower premiums. This simply means that you get to save more of your salary. The HDHP is also good for those who rarely get sick because they won’t even reach their deductible.
2. You can manage increasing health care costs
By offering HDHPs, employers hope that employees will take greater responsibilities in terms of their expenses. In this case, the patient will shoulder most of the bill. Knowing that, patients might look for MRIs that are less expensive, seeking doctors out to know whether they really need a particular test or not, and heading to the ER only when there truly is an emergency.
List of Disadvantages of High Deductible Health Plans
1. You will be hit with ridiculously high deductibles
The average deductible will be at least $1,300 for individual coverage while it’s $2,600 and up for a family. Some reports say someone can pay as much as $10,000 in deductibles. Big companies, on the other hand, offer different plan levels. Meaning there are plans with minimum deductibles as well as plans with higher ones.
2. You benefit more if you are young and healthy
Healthy living has become ever popular. We have more and more people opting to eat healthy and have a daily exercise routine in order to keep fit. After all, prevention is better than cure, right? The same concept goes into HDHP: if you are young and healthy, you get to save more money.
3. You might be tempted to skip necessary health care
With an HDHP, patients will have to pay out of pocket – and at a larger amount – before their insurer pays their share. This is believed to make you shop for cheaper alternatives when it comes to health care. However, that isn’t the case. A study by the NBER found that consumers are just skipping services such as colonoscopies and mammograms altogether. Those aforementioned services are supposed to be free under the Affordable Care Act.
We don’t like to spend our own money when it comes to health care. But if you’re stuck with a n HDHP, don’t forsake your health. You can find lower prices if you take the time to look around – there are tools that can make comparisons so it’s easier for you to decide where you’ll be getting services from.
Natalie Regoli is a child of God, devoted wife, and mother of two boys. She has a Master's Degree in Law from The University of Texas. Natalie has been published in several national journals and has been practicing law for 18 years.