High-Deductible Health Plans Pros and Cons (2024)

FAQs

What are the downsides of a high deductible health plan? ›

Large medical expenses: Since HDHPs generally only cover preventive care, an accident or emergency could result in very high out-of-pocket costs. Future health risks: Because of the costs, you may refrain from visiting a physician, getting treatments, or purchasing prescriptions when they're not covered by your HDHP.

If you are generally healthy and don't have pre-existing conditions, a plan with a higher deductible might be a better choice for you. Your monthly premium is lower since you're only visiting the doctor for annual checkups, and you're not in need of frequent health care services.

Is a $6,000 deductible high? Yes, $6,000 is a high deductible. Any plan with a deductible of at least $1,400 for an individual or $2,800 for a family is considered a high-deductible health plan (HDHP), according to the IRS.

If you have few needs, go with the HDHP. However, if you visit a doctor's office regularly, see specialists, and take several medications, a PPO without a high-deductible might be the better choice.

The main drawback to choosing an HDHP is having potentially high out-of-pocket expenses when you receive covered services during the year. You pay more in upfront costs (your deductible and copays and/or coinsurance) for nonpreventive care until you meet your yearly out-of-pocket maximum.

A high deductible healthcare plan has premiums that are significantly lower than those offered by traditional plans such as PPOs. These savings are one of the most commonly cited reasons for choosing a high deductible healthcare plan.

Copays do not count toward your deductible. This means that once you reach your deductible, you will still have copays. Your copays end only when you have reached your out-of-pocket maximum.

Disadvantages of PPO plans

Typically higher monthly premiums and out-of-pocket costs than for HMO plans. More responsibility for managing and coordinating your own care without a primary care doctor.

For calendar year 2024, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not ...

HDHPs are generally good options for young and single employees who are more likely to be healthy and don't need coverage for spouses and dependents. Because they utilize fewer medical services, these employees can avoid the downsides of higher deductibles (see below) and enjoy the benefits of cost savings.

How to survive a high deductible health plan? ›

You'll pay less each month.

If you're young and in good health and anticipate only needing preventive care like annual wellness exams or screening tests, then an HDHP could be a good choice for you, says Dr. Kullgren. These items are covered 100% when you stay in-network.

Copays are the set amount you pay for a covered health care service. For example, if a lab test costs $20 and the lab copay is usually $40, you'll only pay $20. There are no copays associated with Bronze high-deductible health plans (HDHPs).

The major effect of high deductibles is not lower total health care costs, but rather a one-time shift in spending from insurance premiums to patient out-of-pocket outlays. In future years, premiums are likely to continue to rise.

Negotiate payment plans with healthcare providers: If you have a high deductible, it can be overwhelming to pay for medical services in a lump sum. Don't be afraid to negotiate payment plans with your healthcare providers. They often have options available to help spread out the costs over a longer period of time.

Tax benefits are three-fold: your additional voluntary contributions are pre-tax or tax-deductible*, interest earned is tax-free, and HSA distributions are tax-free if they are used to pay for qualified medical expenses. * Contributions are tax-deductible on your Federal tax return.

Policies with lower deductibles typically have higher premiums, meaning you'll pay more each month for your insurance coverage. However, if you have a higher deductible, you may be able to save money on your premiums but may be responsible for paying more out of pocket if you need to file a claim.