High deductible health plan – A Detailed Guide
While a high deductible health plan may be considered expensive, it is essential to focus on the benefits it provides before judging its value solely on the cost.
In simpler terms, if each plan requires a fee for investment, your investment is required to serve its intended purpose effectively. Therefore, choosing an insurance plan shouldn’t solely be based on expense but on value, otherwise, it will not serve you.
This article provides more detailed information on value and limitations to decide whether this plan is suitable for you.
What is a High deductible health plan?
According to the Internal Revenue Service (IRS), HDHP is a health insurance plan with specific minimum deductibles and out-of-pocket maximums.
You can purchase a high deductible health plan through an employer as part of the benefits package or in a private market. You can equally access the package through healthcare.gov for the government-sponsored healthcare exchanges.
Another good window to purchasing this plan is also during open enrollment periods.
Nevertheless, If you are concerned about the high cost of the plan, the Affordable Care Act (ACA) provides some services. It ensures that preventive care from in-network providers is fully covered. That is, regardless of whether you’ve met your deductibles or not.
What are the benefits of high deductible health plan?
Lower premiums: With the premium, you will be paying less of your health coverage monthly.
Tax-free account spending option: If you’re covered by an eligible plan, you will have the privilege of saving on medical expenses when combined with a Health Savings Account( HSA).
The Health Savings Account, because of the tax advantages it offers, motivates many people who purchase the plan to take advantage of it. Unfortunately, before you can benefit from the account, the health plan must be approved by the IRS with some requirements; otherwise, you won’t have access to the account.
What is the tax advantage of a health savings account?
Free withdrawal of tax for qualified expenses: People usually consider this account as a premium retirement savings tool, due to their triple tax benefit. In actuality, with this plan, you can eradicate the fear of medical payments and taxes on the funds withdrawn for qualified medical expenses.
Pre-tax Contributions: The funds you contribute would automatically become pre-tax, thereby, lowering the tax burden for the year. The maximum contribution is mostly $3,650 for individuals and $7,300 for a family to be deposited into your health savings account.
Investment of funds: You can invest funds with no tax involved.
How to maximize high deductible health plan
Personalize your healthcare needs: Even though we do not plan to experience issues that lead to medical expenses, life situations are just unpredictable, hence, the need for precautionary measures.
It is crucial to realize your healthcare needs before subscribing to a high-deductible health plan.
Save ahead: The second strategy to maximizing this plan is to save ahead for the deductible. If it’s worth investing in, then it’s worth saving for.
Conclusion
In conclusion, a high deductible health plan means you must fund your medical expenses to an extent before your insurance health plan picks up the tab.
