Nov 10 2011

Can You Really Save Money With a High Deductible Health Insurance Plan?

This column first appeared
in the Syracuse Post Standard November 8, 2011

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Last column we looked at Medicare Open Enrollment and how Medicare recipients can find great resources for helping them choose which health plan is right for them.

Unfortunately, the rest of us, those who are under age 65 and face Open Enrollment for private health insurance, aren’t so lucky.  While resources do exist to help us choose, not many of them are objective.  Most are offered by health insurers themselves and tend to be biased.

This year, one of the biggest Open Enrollment questions we under-65ers have is whether it makes sense to choose a high deductible plan. These plans have much lower monthly premiums, but require us to pay thousands more from our pockets before insurance pays its portion.

Those lower premiums are so tempting!  But they may also end up being very expensive. There is a reason the alternate term for “high deductible” is “catastrophic.” “Catastrophic” is supposed to refer to the fact that you will be covered if you or your family member suffers a catastrophic accident or diagnosis. But if it’s not the right plan for you, it can be catastrophic for your wallet.

So how can you determine if a high deductible plan is the right choice?  Get out your crystal ball, and try to predict how much medical care you and your family members will need in 2012. How many doctor visits?  How many prescriptions? Are you due for expensive tests? Will your 10-year-old soccer star get a concussion? Will you fall off the roof while scraping ice?

The more medical care you require, the less likely a high deductible plan will save you money.  If your medical needs eventually cost more than the deductible amount, then, in total, you will probably lose money over choosing a regular plan with a lower deductible, even though the premium is higher.  Remember, the total deductible isn’t all you’ll pay when you need care.  Once the deductible is met, your additional co-pay may be as much as 40 percent of each medical bill.

If you and your family are mostly healthy, and you decide a catastrophic insurance plan will serve your needs, then establish a Health Savings Plan, too. It’s tax-favored savings you may use for any health-related need, and even if you don’t spend it, does not disappear at the end of the year.

Here are some additional resources for making smart choices during Open Enrollment:

•  Choosing the Right Insurance Plan During Open Enrollment

•  Should I Choose a High Deductible or Catastrophic Health Insurance Plan?

•  What Is a Health Savings Account?

•  Medicare 101 and Medicare Open Enrollment

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