High or Low Deductibles; Which to Choose is discussed in this article. You will find this article informative.
Insurance deductibles are one of the features of insurance that creates a lot of confusion especially because there are lots of choices in the marketplace thereby making it a bit tedious for people to make choices.
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If you are considering the right health care plan for you and your family in years to come, it becomes quite necessary to have a clear understanding of deductibles, the high and low, know how they both operate and how the premium paid monthly on these deductibles could affect your decision and the effect that these plans could have on your coverage.
How deductibles work
The sum of money that is required of you to pay ahead for your health care before the insurance you purchased begins to cover the cost of your health is referred to as deductibles.
The cost of deductibles may differ depending on the policy of insurance. It could be from a few dollars to thousands of dollars. However, some plans do not necessarily have deductibles.
As soon as your annual deductible is paid by you, you will need to pay your coinsurance as required by your insurer being another way of sharing costs until you get to your highest rate and as soon as you get there, the insurer begins to pay you a hundred percent of all the services that are covered.
The balancing act between premiums and deductibles is insurance plans. Once you agree to pay more money on your premium on a monthly basis, definitely, your deductibles will be lower than that of a person paying lesser.
Also known as “Consumer-directed health plans”, High deductible plans are those plans whose deductibles have passed the mark or limit set by the Internal Revenue Service (IRS).
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These deductibles are nothing lesser than $1,300 for those that cover a single person and about $2.600 for plans that cover an entire family.
When you pay a higher deductible, it serves profitable for both insurer and you because for the insurer, when you pay a higher deductible, you automatically become liable for a greater portion of the cost of the initial health care and this saves them a lot of money but to you, you may not have to pay a lot of monthly premiums because all expenses must have been covered by the high deductible you paid.
Furthermore, when you opt for a high deductible plan, you automatically qualify for an account that gives you the liberty of putting away a certain amount of pre-tax money in order to take care of medical expenses popularly called a Health Savings Account (HSA).
In situations where the employer of a person is responsible for paying the health insurance of his employees, the company may decide to a lot some dollars to the Health Savings Account of their employees which sometimes may be equal to the employee contributions and this may even result in reasonable pre-tax savings.
Your Health savings account is typically tied to a debit card of your choice which you usually use for miscellaneous as well as high deductibles.
Considering the fact that the funds in your Health savings account are usually not liable to tax like other income you may have, it, therefore, serves a multi-purpose; curtailing the burden of your tax as well as helping you to put away money in order to cover the cost of your health care.
Just like every other subject of discussion, high deductible plans have their own disadvantages because sometimes it might become very difficult to meet the high deductibles in the advent of high and expensive medical bills.
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The high deductible plans better suit those people who are very healthy, single, and families without children because according to the Affordable Care Act, preventive care is generally free and many other policies embedded will give you the liberty of seeing your primary health care doctor with a co-payment plan instead of having to pay towards the deductible. For someone who is considered healthy, visiting the doctor every year will not cause any setbacks financially.
If you are considering a low deductible plan, it means that you will have to pay a very high premium on your insurance plan because the amount of money you get to pay before your insurance company takes over will be far less expensive.
The specifics of the low deductibles may differ based on the plan details and the location, sometimes the low deductible play may end up costing two times at least monthly as that of the high deductible plan.
For someone who expects to have a large amount of care medically, it is advised that they consider plans that have higher premiums and lower deductibles, especially those persons who have chronic illnesses and many need to have appointments with specializations or may even need bed rest in the hospital in years to come.
These set of persons may end up saving more if they engage in or purchase plans with lower deductibles. In the same vein, families with a lesser number of children or when have children that fall seek often or are engaged in spitting activities.
Things to consider when choosing a deductible
Before choosing a high or low deductible, one of the things which serves as a foundational element is your income. How much do you earn on a regular basis and how much cover your expenses? This is a key factor to consider as well as the following:
1. Check if you are qualified for a discount
Before you conclude that a plan is too high for you, you should check the policy to find out if you are qualified for a discount.
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2. Streamline your choice
Because there are so many options available, it might seem too vague to choose so, it is important that you narrow your choices down to just one low-deductible health plan and one high-deductible health plan.
3. Do an estimate
How much do you hope to spend on your medicals in the coming year? When you estimate this, you could now compare the coverage and choose which one is better suitable for you.
4. Put other things into consideration
Aside from deductibles, there are many other things you need to put into consideration before you choose a plan and these include network size, covered expenses, plan structure, and out-of-pocket maximums.
5. Consider your values: it also has to do with what you place premiums on, do you prefer saving more money on premiums or wearing yourself out trying to pay up a deductible.
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Consider these things and pick up a plan which best suits you.