A high deductible health plan usually has a deductible of $1,000 or more. To understand how this works, think of your car insurance. A higher deductible means you accept more of the financial risk, so the insurance company charges a lower premium. The concept is the same for a high deductible health plan.
You pay more out of your own pocket when you visit a doctor or hospital for care than you would with other types of health plans.
But your monthly premiums are lower. That saves money for whoever is paying those premiums – you, your employer, or both.
Most people with car insurance will not have an accident in any given year, so they won’t have to use their car insurance. The same holds true for many people with health insurance. They won’t have major medical expenses in any given year. Many people will only see their doctor for preventive services.
The fact is that most people who save money by purchasing a high deductible health plan do not meet their deductible in any given year. But they still have peace of mind knowing that they have the protection of the plan if they should need it.
Let’s take a closer look.
A high deductible health plan often has a deductible greater than $1,000 a year, but its premiums are usually much lower than the premiums of other plans.
Some high deductible health plans, known as consumer directed health plans, or CDH, are offered with tax-preferred spending accounts, such as health savings accounts and health reimbursement arrangements. These accounts let you use tax free dollars to pay some of your expenses.
There’s a limit to how much money you’ll have to pay out of your own pocket for care that is covered by your plan. This limit is called an out-of-pocket maximum. Your total cost for covered services won’t exceed that predetermined maximum during a plan year.
CareFirst has worked with providers to obtain medical treatments and services at lower rates. These lower rates -- called the allowed benefit -- are applied to your deductible.
In most cases, you won’t have to pay a deductible when you receive preventive services.
Taking care of your health is always a good idea. With a high deductible plan, you won’t just feel better. You’ll also save money.
You can focus on staying healthy because preventive care is covered in full, or subject only to a copay.
How can you take care of your health? Here are some important steps:
Visit your doctor on a regular basis for annual check-ups, mammograms, certain cancer screenings, and other routine services.
Live a healthy lifestyle that includes exercise, a good diet — and no tobacco.
Follow your doctor’s advice. That includes taking medication as directed to manage chronic conditions such as asthma, diabetes, or high blood pressure.
Intro to CDH
Health Insurance Basics
Health Savings Accounts
HSA Tax Benefits
How HSAs Work
Health Reimbursement Arrangements