You have to be careful while shopping for the right health insurance plans. There are basically two types of health insurance plans- high deductible and low deductible insurance plans. Your choice is largely determined by your medical situation. Before selecting the right one, you have to know how deductible actually works out.
So, how does deductible work out? Wondering what is a deductible? It is the limit that one has to meet for the insurer to give out benefits. Once after paying the deductible, you may owe some portion of your insurance bill which is known as co-insurance. Under high-deductible plans, co-insurance and co-payments will cost more. An example- Suppose you meet with an accident while running and you fall down and break your leg. Immediately, you are taken to a hospital which comes under the insurance list that you have. In your initial visit, suppose you pay $100. However, after a few months, you are billed with a whopping $2500 that was covered by your plan under 80 percent. So, the question is how does a single short trip result into $2500 bill? Let’s understand this that your deductible is $2000 which is quite high. Now, suppose the hospital charged you a total $4500 for treating your leg. After the deductible, $2500 is the balance that was covered by your plan’s 80 percent. Therefore, co-insurance will allow to reimburse the remaining 20 percent. Therefore, it means you paid $2500, while your insurance carried paid $2000. When to choose low-deductible option and high-deductible option? If you are looking for less financial commitment, the low-deductible option is the best. These types of health plans tend to charge more up front. If you have chronic illness or ongoing medical problems, then the low deductible options are the best. People who often have to visit the doctor for reasons like diabetes, then the low-deductible option is the right one. In this case, premiums are higher but the insurer tends to pay higher percentage for your medical condition. Therefore, opting the low-deductible pay will help you pay less than $1000 for your broken leg. Therefore, to put it in few words, low-deductible is the right option for those having limited savings option. On the other hand, a high deductible plan is suitable for those who seldom have to visit the doctor for poor health. The best part is that you will have to pay lower premiums with these types of high-deductible plans. Since high-deductible plans are aimed for “consumer-directed health plans”, you can think about the right types of healthcare that you want. This type of deductible plan allows you to participate in health savings account. This option allows you to keep pre-tax money aside to meet out-of-pocket expenses. The best part is these accounts earn interests without having to paying tax. In addition to this, your employer may contribute to your consumer-directed health plans. Thus, assessing all your options and the pros and cons of both, you will have to decide which deductible option is for you.
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