High Deductible or Low Deductible? Picking the Right Healthcare Plan

(1) Deductibles: The Biggest Cost Factor When Picking the Right Health Insurance

For most people, the deductible is going to be the biggest cost factor when picking a health insurance plan. That is because this is the amount of money that you will have to pay before the insurance kicks in and starts sharing the bills with you.

You will have two main options:

1. High deductible insurance plans
2. Low deductible insurance plans

The separating point between the two plans is this:

• Any insurance plan that has a deductible LESS THAN $1,700 per individual or $3,400 per family is considered a LOW deductible insurance plan.
• Any insurance plan that has a deductible GREATER THAN $1,700 per individual or $3,400 per family is considered a HIGH deductible insurance plan.

And remember, the lower the deductible the higher the premium and the higher the deductible the lower the premium.

It looks something like this:

So the main question is, when should you want to pay a lot out of pocket to begin, and when you want to pay a little?

When Should You Pick a High Deductible Plan?

Keep in mind that I write this while painting with a broad brush. There are certainly exceptions to the rules when picking your health insurance plan (as is also true with all of personal finance). But for the most part, this is when I would pick a high plan.

I would be willing to pay more out of pocket initially if I were overall very (or at least mostly) healthy. If you are going to go to the doctor for your annual checkup and only go to the doctor if you get hurt, break a bone, get very sick, etc.

The reason to pick a high deductible plan in this scenario is because you probably won’t have very many medical bills anyway. And because you won’t have very many medical bills, you will be more likely to pay for them out of pocket.

Also, when you don’t need to go to the doctor very often then you don’t want to have high premiums on your health insurance. When you pick a high deductible health insurance plan then you will have very cheap premiums.

When Should You Pick a Low Deductible Plan?

You should consider picking a lower one (high premium) plan if you are someone (or your family) is consistently needing medical care. This is because you will quickly hit your amount to pay and the insurance company will start sharing the costs of the medical bills with you. 

Additionally, you will also hit your max out of pocket expenses quickly as well. This means that the insurance company will pay for all medical needs.

If you are constantly going to the doctor and need medical attention often then you will hit these amounts quickly. That makes it worth paying the higher premiums each paycheck for this coverage (in most cases). 

Final Thoughts

As I said, health insurance is a very confusing and broad topic. But picking the right healthcare plan is a really big deal. If you pick the wrong one it can cost you THOUSANDS. 

But remember, if you do happen to pick the wrong one or you are reading this one and just now realizing that you are in a plan that is not optimal for your situation, that is okay. Each year, companies are required to have an open enrollment period and you will be given the opportunity to change your health insurance coverage. Each company is different as to when that period is. Just check with your HR department and they will know. 🙂

I know this is confusing but I am here to help!

You can do this!

Until next time!