Benefits of High Deductible Health Plans

High deductible health plans (HDHPs) often elicit a scowl from the general public because these insurance policies carry lower premiums but higher deductibles than more traditional plans. However, this option can provide a myriad of benefits for those looking to save money and manage their own health.

Lower Premiums

• A high deductible health plan could mean more money in the bank.

  The most obvious and immediate benefit of a high deductible health plan is the lower premium. As economic conditions tighten, consumers continually look for ways to shave costs from their budget. After paring back discretionary spending such as cable channels and dinners out, many are left at a standstill. Choosing a high deductible health plan can save hundreds for those who use health insurance sparingly.

Preventive Care Allowances

• Many high deductible health plans cover routine physicals.

  Many high deductible health plans cover routine preventive care visits at low or no cost to the policyholder. Some plans may require a nominal co-pay for preventive care. Some high deductible health plans even offer to cover a percentage of the costs for preventive initiatives such as weight loss and smoking cessation programs.

Tax Advantages

• Health savings accounts allow tax-free savings to pay medical costs.

  Many employers offer health savings accounts (HSAs) to employees enrolled in high deductible health plans. Individuals can set aside pretax earnings in health savings accounts to pay for medical expenses. These accounts roll over into each new plan year, so participants don't have to scramble to spend the money as they would in a "use it or lose it" scenario with traditional health care reimbursement accounts. HSA funds accrue interest and can be allocated toward retirement.

Catastrophic Coverage

• The greatest benefit from a high deductible health plan materializes in a catastrophic health event. Patient liability is limited to the deductible and any specified coinsurance rate.