Currently, especially with Obama care and with high cost and difficulty in obtaining insurance for employers and individuals, knowing what to do or how to afford health insurance is challenging.
The concept of high deductible insurance is not a new concept and has been around for quite a while. The benefit of high deductible plans over the conventional lower premium health insurance plans is that it costs less. The downside is that the cost for the use of medical and wellness services is upfront, depending on the nature of the deductible, up to several thousands of dollars before the protection of the insurance kicks in.
The monthly savings, if paying for a high deductible plan compared to the monthly premium costs of a conventional health insurance policy, will more than likely benefit the individual and the employer.
This becomes a “no brainer” for those who typically don’t use the health care system and are relatively healthy to begin with.
Furthermore, even if one does use the entire deductible amount, once that amount has been satisfied during the year, the rest of the insurance comes into play and the person has the protection of the “ceiling” on additional spending related to health care.
Even though the spending comes “out of pocket” initially for the deductible, the total yearend costs will be comparable to the conventional health insurance spending in monthly installments over the year.
This is especially pertinent in the current situation where a single incidence of a financial catastrophic event, such as hospitalization, surgery or a major diagnosis has the capacity to ruin even the most financially stable family or individual.
For instance while in my early 30’s, I recall trying to decide whether to continue Cobra coverage. At that time, I was in excellent physical health with no medical issues and considered the monthly insurance payments to be a waste of time and money.
Fortunately for my family and me, I decided to keep a high deductible coverage policy. At the age of 32, I was diagnosed with stage-three colon cancer. My condition required a visit to the emergency room, hospitalization, surgery and chemotherapy. Also, I made frequent visits to my primary care provider and specialists.
If it wasn’t for the health care coverage, this would have forced me to wipe out my life savings, sell my house and car, and would have forced my family into bankruptcy.
Dealing with the emotional and physical aspects of a cancer diagnosis is difficult enough in itself. I was relieved that there was a “ceiling” on the medical spending and that the financial situation for my family was not compromised.
Another very useful feature of the high deductible plan is that it usually comes with a tax deductible portion with a Health Saving Account (HSA), which one can use not only on acute and chronic health issues and spending, but also on approved wellness and prevention measures.
Research has shown that people spend millions of dollars on wellness related products and services, which are often out of pocket. Having the option to use the HSA account for approved wellness expenses can be a win-win situation, minimizing personal expenses while keeping the person healthy.
The true definition of health is not just absence of symptoms or medical diagnoses. Optimal health means possessing a mental, spiritual and physical reserve that keeps major illness at bay while minimizing the need to spend money for acute and chronic medical treatments.
If the HSA amount for the year has not been used entirely, the portion that is left is typically rolled over to another year. Thus, this can be a vehicle for retirement savings in addition to the tax advantages while paying for wellness and medical services.
For instance, most of my deductible currently is being utilized to keep myself healthy and while I am in remission after successful treatment of the colon cancer. I am fully aware and appreciate that if something were to happen resulting in significant expense, the high deductible plan will keep me safe by protecting me with a “ceiling” of how high my costs might be.
For those who have not considered having health insurance or those considering their options, with Obama Care and new requirements for both individuals and companies, the high deductible plans combined with HSA is a viable option.