Is a High Deductible Health Plan the Right Choice?

A high deductible health plan (HDHP) may or may not be your best healthcare choice. Consider past medical expenses, anticipated medical expenses, and your ability to absorb large unexpected expenses before making a decision.

Remember, a HDHP must be in place before tax deductible Health Savings Account contributions can be made.

Following are the 2018 requirements for a plan to be considered a HDHP:

2018

self-only coverage

minimum annual deductible

$1,350

max out-of-pocket expenses

$6,650

family coverage

$2,700

$13,300

If you see the doctor pretty often, and/or take numerous medications, or expect increased healthcare costs for the year, a high deductible health plan may not be the best choice for you. More than likely a lower deductible plan, where your medical costs (deductible, copay, and coinsurance) will be lower than with a high deductible health plan will be more affordable, despite the higher premium you’ll pay.

If you anticipate little or no healthcare needs for the coming year, a high deductible health plan with the lower premium will probably be the most affordable. Even though you have higher medical costs when you need care, you pay a much lower premium than with lower deductible plans. This is how most healthcare plans work.

Your company probably offers several of these "tiers" of insurance. The high deductible health plan options that are HSA eligible will be found in the lowest tier (lowest premium but highest deductible, coinsurance and/or copays).

On the new healthcare exchanges, the lowest tier is called the bronze option, then silver, gold and platinum. HDHPs are found under the bronze option. Your company plan may use different lingo.

The tradeoff

That's the tradeoff with HDHPs, and why they are both lauded and decried:

  • The healthcare consumer has great incentive to be more thrifty and frugal with their health care needs. Collectively, this could greatly reduce costs.
  • Having to pay such high out-of-pocket amounts could deter a healthcare consumer from seeking out the care they need.

Benefits of a healthy lifestyle

That's why a HDHP is best for those who expect their health care needs to be minimal and/or can afford to pay their medical expenses out-of-pocket.

Maintaining a healthy lifestyle, as well as being a savvy healthcare consumer go hand in hand with a HDHP. That means keeping a good body weight, eating right, and exercising regularly, as well as understanding the cost of every test result, procedure, and prescription.

Whether you're an employee with employer-sponsored health insurance, buying privately, or getting health insurance over the exchanges, Obamacare's new rules help you with your healthy lifestyle. Gratis "wellness" services are a big part of the Affordable Care Act.

One preventative care visit per year is now free of charge, no matter which tier of insurance you choose. Certain other preventive procedures and tests, including screenings, hospice, pre-natal and post-natal care, plus eye exams and glasses for children are also covered without regard to deductible or co-pay.

Many of these services may already be offered by your present plan, while others will be added in the future as employers scramble to stay in compliance with upcoming deadlines for implementation:

  • Screening for gestational diabetes
  • Testing for the human papilloma-virus (HPV)
  • Counseling and screening for sexually transmitted diseases and HIV
  • Contraceptive methods and counseling
  • Breastfeeding support, supplies, and counseling
  • Screening and counseling for domestic violence issues

Around 30% of existing health care plans are considered "grandfathered," meaning they were in existence prior to March 23, 2010 (the date President Obama signed the Patient Protection and Affordable Care Act into law) and don't have to comply with the above inclusions right away.

By law, you've already been notified if your current plan is one of these grandfathered plans.

Is a high deductible health plan right for you?

Choosing a high deductible health plan may or may not be the most affordable choice for you; However, if your healthcare costs are relatively low and you can afford to pay your medical expenses out-of-pocket, combining a HDHP with the advantages of a Health Savings Account just might be the right move.