There are many different options for health insurance, which can make things somewhat confusing. Whether purchasing a policy as an individual or looking for coverage for the entire family, it would be important to conduct research to determine the best policy and the most cost-efficient options available, especially insurance that covers catastrophic illness. In this article, we will provide an overview of what is known as a high deductible health plan.
What is a High Deductible Health Plan?
Sometimes referred to as HDHP, this particular type of plan can be designed with reduced premiums or the higher premiums than seen with a traditional plan. Another aspect of high deductible health insurance is that to qualify, you must have a health savings account. Also, there are some plans that provide wellness benefits, which are offered prior to the deductible being paid. With these plans, coverage for some kind of catastrophic health-related issue is usually provided.
As mentioned, to qualify for a HDHP in the United States, you must participate in a health savings account or other similar programs that offer tax advantages. Over the years, components of this plan have changed. For instance, the pricing structure was modified in 2012 at which time the minimum annual deductible for self-coverage was increased to $1,200 and, for an individual with family, to $2,400.
In addition, this change provided that the most you would pay out-of-pocket for self-coverage was $6,050 and $12,000 for an individual or family member. Keep in mind that these limits excluded out-of-network services for expenses and deductibles in the case of network providers being used. These figures were also in line with requirements by the IRS, which are modified on an annual basis according to changes in cost of living.
For 2013, another change occurred for self-coverage and self-coverage with family to include the following:
- Self-Coverage – The annual limit for contributions is now $3,250
- Self and Family Coverage – This too was increased from 2012 to $6,450
Other changes for the current year state is that you will be required to meet a minimum annual deductible rate of $1,250, and for an individual plus family, $2,500. Along with this, the annual cap for out-of-pocket expenses has been set at $6,250 for self-coverage and $12,500 for an individual with family.
In simple terms, health insurance with high deductible is designed so the amount of deductible is higher than that of a conventional insurance plan. Out-of-pocket expenses are not usually covered until the annual deductible amount has been reached. Because this type of plan is unique, the cost of premiums is typically lower as well.
Additional Key Factors
In addition to the above, there are other factors associated with a high-deductible health plan that should be fully understood. For instance, most plans of this kind offer exceptions for expenses to include immunizations, weight loss programs, well-baby/child care, occasional health evaluations, tobacco cessation, and specific devices used for screening. To determine the exact exceptions, you will need to review the specific plan offered due to all the variations.
Additionally, by being covered by this type of health insurance, you will not be allowed to have coverage from any other health plan. Keep in mind that there are a few exceptions such as vision, dental, accident, long-term care, disability, and insurance for specified diseases to include cancer; but overall, this is the rule.
Something else to think about is that prescription medications and office visit co-payments will only be covered after the annual deductible has been satisfied. However, these two expenses are also subject to the deductible and the amount of coverage for prescription medication and co-payments are allowed only after the yearly deductible is reached.
One other aspect of a health plan with high deductible is that usually it is offered by an employer who provides employees with a Health Reimbursement Arrangement or HRA plan or Health Savings Account, also known as an HSA.
For years, there were limitations regarding companies that offered employees a high deductible health plan, but today, this is quickly becoming the norm. Although the amount of deductible is usually significant, the cost can be compensated by contributing pre-tax dollars to the associated Health Reimbursement Arrangement (HRA) or Health Savings Account(HSA) plan.
Even though this is a more expensive type of health coverage, when faced with a catastrophic illness it would be a wise investment. By selecting on the preferred state within the form below, you can quickly and easily find the best coverage and most affordable rates for high-deductible health insurance.