Finding health insurance coverage that fits your budget and needs can be challenging. However, understanding how high deductible health plans (HDHPs) work may open up potential options you never knew were available. For those curious about what high deductible health plans have to offer, here’s what you need to know.

What is a high deductible health plan?

A high deductible health plan is just what it sounds like: it’s a policy that has a lower monthly premium and a higher deductible than other traditional health insurance plans. Generally speaking, a HDHP works by covering eligible healthcare expenses after you’ve met your deductible. That means, you pay out-of-pocket for those expenses until you meet your deductible. Then, your health insurance coverage kicks in.

The deductible amount will vary depending on the HDHP you choose, but naturally, the higher the deductible, the more you’ll have to pay out-of-pocket before your insurance will cover eligible medical costs.

Pros and cons of high deductible health plans

When choosing between a high deductible health plan and a traditional one, you’ll need to strongly consider the pros and cons of having a HDHP.

Some of the pros of high deductible health plans are:

• You pay lower monthly premiums. If you anticipate only needing preventative care, which is covered by most insurance plans when you see an in-network provider, then you could potentially save a lot of money over time.
• You may be able to have an HSA. Some HDHPs can be paired with a health savings account (HSA), which is a flexible, tax-free savings account that you can use to pay for eligible medical expenses. Any money you deposit into your HSA is tax-free, which may also help you save money.

Some of the cons of high deductible health plans are:

• You have a higher deductible. That means you’ll have to pay everything out-of-pocket until you reach your deductible amount, which is determined by the plan you choose. The only exception is preventative care, which is covered by your insurance plan when you stay in-network.
• You may face expensive, unexpected medical bills. If you end up having unexpected medical problems, you may have to pay a lot of money out-of-pocket to meet your deductible. Depending on your health condition(s), this could be quite expensive.

Use a pre-tax health insurance savings calculator to get an estimate of how much you could save

Generally speaking, if you only go to the doctor once a year, a HDHP may end up saving you money in the long run. However, if you have a chronic health condition that requires you see the doctor or specialists several times a year for treatment that’s above and beyond preventative care, a traditional health insurance plan is likely the better option for you. If you are looking for a pre-tax health insurance savings calculator, visit this website.

If you’re curious to know how much you could save with an HDHP, consider using an online pre-tax health insurance savings calculator to get an estimate of how much money you could potentially save. Although a pre-tax health insurance savings calculator isn’t a guarantee of actual savings, it may help you make a wise decision about your health insurance plan.

Read a similar blog about invest HSA here at this page.