As open enrollment season begins at many employers, it is time to start thinking about what you will do for your health plan. One of the options increasingly being offered is a high deductible health plan. These plans help you by increasing your deductible — what you pay out of pocket — and offering a much lower monthly premium. You can save money each month, and many people find this an attractive choice.
However, before you get all excited about this cheap option that may be provided by your employer, it is important to understand some things about high deductible plans:
- A high deductible means more out of pocket expenses. Until you meet your deductible, you are paying out of pocket on everything (except maybe preventative care), from doctor’s visits to prescription medication.
- These plans are best for those who don’t use very much health care: If you are relatively young and healthy, these plans are ideal because you won’t be paying much out of pocket, and you will see reduced premiums. For those who have chronic conditions, or who use a great deal of health care, a high deductible plan may not be the best choice.
- High deductible plans are best paired with HSAs: If you get a high deductible plan, it is usually a good idea to open a Health Savings Account as well. This way, you can set money aside to make your out of pocket payments. Your money grows tax free, and rolls over year to year, working for you.
Carefully consider your options and your health care needs. One of the best ways to save money each money is to increase your deductibles on insurance plans. If you have a high deductible health plan, you could save a great deal — as long as you are healthy and don’t use many health care services. You can put some of your monthly premium savings into a Health Savings Account that works on your behalf over time, and can even be used as a retirement account. Run the numbers and see if this option might be right for you.