High-Deductible Health Plans Pros and Cons

What health insurance you choose comes down to a few factors: Your overall health, financial stability, and what is/what isn’t offered by your employer. Something you might want to consider is a high-deductible health plan (HDHP). Here’s a quick look at HDHPs.

The Basics of a High-Deductible Health Plan

With an HDHP, you typically pay lower premiums than a low deductible plan. An HDHP also requires you to pay more out of pocket before your health insurance kicks in.

The Pros

The benefits of a high deductible health plan are:

• Low Monthly Premiums. HDHP premiums typically cost less per month than low-deductible health plans.

• Health Savings Account. When you have an HDHP, you also qualify for a Health Savings Account (HSA). HSAs are great because contributions and withdrawals are tax-free when used for qualified medical expenses. You can also invest HSA funds for additional tax-free growth.

• Employer HSA Contributions. According to one report, more than 50 percent of employers offer contributions to employees’ HSAs.

The Cons

The downsides of a high deductible health plan are:

• Expensive. The upfront costs can be costly.

• High Payments. With a high-deductible health plan, your out-of-pocket costs may be higher. If something unexpected happens you must be financially prepared to cover the high deductible.

• Avoiding Care. Those high payments for medical care might keep you away from checkups and other preventative measures.

Do One Thing: Consider your overall health and financial ability to handle a large deductible before signing on for an HDHP.