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high deductible health plan

Advantages and Disadvantages of a High-Deductible Health Plan

According to IRS rules, a high-deductible health plan is exactly what it sounds like. It is a health insurance plan with a deductible of at least $1,400 if you have an individual plan or a deductible of at least $2,800 if you have a family plan. The deductible is the amount you’ll pay out of pocket for medical expenses before your insurance pays anything.

There are advantages to having an HDHP. They usually have lower premiums than a similar health insurance plan with a lower deductible. For people who don’t anticipate having many medical expenses for the upcoming year, it makes sense to have a lower premium. This way, there is a good chance you’ll save lots of money.

Just make sure that the out-of-pocket maximum is affordable in a worst-case scenario. If you can’t, then a health insurance plan with higher premiums but an affordable out-of-pocket maximum might be a safer choice if the HDHP’s out-of-pocket maximum is more than you can cover.

If you do choose the high-deductible plan, you’ll still have 100% coverage for preventive services from in-network providers before you meet your deductible because of the Affordable Care Act requirements. Quite a few services fall into this category, and you aren’t responsible for any copayment or coinsurance for any of them. 

But keep in mind there are some big drawbacks to choosing an HDHP. As of January 1, 2021, the Affordable Care Act rules state that the most any person can pay in out-of-pocket maximums are $8,550 for in-network benefits. The family maximum is $17,100. Once you meet your max out of pocket, all your costs will be 100% covered for the rest of that year.

The bottom line is an HDHP can save you money, but it’s important to estimate your health expenses for the upcoming year and see if it is the best option for you.

Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.