If you are enrolling in your employer’s health insurance, you might have some questions regarding which kind of plan to choose. Your employer might offer a high deductible plan, in which you can sign up for an HSA. Or you can opt for a low deductible health insurance plan. There are many differences between these plans besides the price.
High Deductible Insurance Plan
A high deductible plan has a higher deductible, which needs to be met before you insurance benefits kick in. For 2019, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family.
High deductible health plans, also known as HDHP, have higher out-of-pocket maximums. Once you reach the limit, which includes your deductible payments, co-payments, and coinsurance), then insurance pays 100% of any services after. The 2019 limit on out-of-pocket expenses is $6,750 for individual coverage and $13,500 for family.
If you are healthy and rarely get sick, then you should consider a HDHP. Other considerations of getting this type of plan include:
- If you can afford to pay your deductible upfront or within 30 days of receiving a bill if a medical emergency comes up.
- You can contribute to an HSA.
- You are interested in using an HSA to save money.
HSA
Health Savings Account, or HSAs, are only compatible with high deductible health plans that are specifically tagged “HSA-eligible.” HSAs are tax-advantaged, giving you more of a reason to use them. On this note, if you make a withdrawal from the account to pay for a qualified expense, then the amount will not be taxed.
As you make contributions to the account, you can rest assured that when you withdraw them later, they’ll help save you money. This comes from being tax-advantaged. When you have a qualified medical expense (like health plan copayments), you can withdraw money from your HSA, and that expenditure is tax-free!
Low Deductible Insurance Plan
These types of plans have lower deductibles, so when you get sick, you will pay less money up front. One of the main differences between a HDHP and a low deductible plan is that the low deductible plan has a lower deductible is lower, but a higher monthly premium payment.
The thought is that you pay for more monthly payments as a trade-off of having a lower deductible. People who see the doctor normally choose this plan because once their low deductible is paid, then insurance will take over the rest of the costs. People who are sick will meet the deductible fairly quickly. Also, there’s no large out-of-pocket expense to worry about since the deductible is lower.
Another difference between these two is you cannot get an HSA with a low deductible health plan.
Which To Choose?
Your health is the simplest way to decide whether you should get a high deductible health plan or a low deductible health plan.
If you are young, healthy, and will need very little to no care other than preventative care, then a high deductible is the best fit.
A low deductible plan will best suit you if you are:
- Older with multiple health conditions or several prescription medications
- Pregnant or starting a family soon
- Dealing with a chronic condition and need to see the doctor frequently
- In need reparative surgery
- A parent with children that play in sports (due to high risk of injury)
These are all important to take into consideration when considering which type of plan is best for you, and your family. The decision should be based on you or your family’s health care needs, and financial situation.
In need of help comparing plans and choosing the best one that meets your needs and budget? EZ.Insure can help. We will provide you with a highly trained agent that will go over all of your options, and help you choose the best plan for you, for free! That’s right, all of our services are free. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure, or calling 888-998-2027. EZ.Insure makes the entire process simple, easy, and quick.
