Low Deductible Health Insurance

Health insurance can be your life saver in critical medical cases. Your financial burden can be considerably reduced when you or a family member is confronted with a serious medical emergency. Yet, there are millions of people who are living without a health insurance coverage. One reason for this is that, high premiums and deductibles make people wary of seeking an insurance coverage. Though unwise, people do not want to add to their monthly expenditure. Interestingly, some people avoid health insurance because they simply cannot decipher all the insurance jargon of premiums, deductibles, copayment, coinsurance, etc. To add to their misery, people are often exposed to various insurance plans with high or low deductibles, with or without copayments, and so on. Understanding the implications of this is not easy for a common person. To make the matters a little simpler for you, we have tried to explain low deductible health insurance plan and its implications.

Low Deductible Health Insurance

Deductible is basically an amount of medical expense which you pay out of pocket. Although, it is easy to assume that once you are covered under a medical insurance, all your medical expenses will be taken care of by the insurance company. Unfortunately, this is not the case, as you need to pay a part of your medical bill even before the insurance company makes its first payment. This amount is called deductible. Every year, you will be required to pay a certain amount as a deductible. The exact amount depends upon the plan you opt for. It can start from a few hundred dollars and go up to a few thousand dollars. The insurance company becomes liable to pay for your claim only after you meet your deductible. You may want to ask, why you need to pay the deductible in the first place?

To answer this question, we will have to understand a few details about the working of an insurance company. An insurance company makes money through the premiums that you pay. The expenses of an insurance company include your claim amount and processing charges. Processing expenses are more or less same for a minor claim as well as for a large medical bill. A health insurance deductible is a means for the insurance company to ensure that they are not required to process several minor claims. The client can take care of minor expenses by paying them out of his pocket, whereas, only serious claims come for processing. This way the insurance company saves on its processing time and cost.

Choosing a Deductible Health Insurance

In the health insurance industry nothing is as straight as it appears. Each of the plans presented before you will have some pros and cons. Opting for low deductible health plan may seem like a natural choice for you. However, you need to think carefully, because this option involves certain pitfalls. A low deductible certainly ensures that you quickly meet your deductible so that the insurance company pays for the rest of the amount. On a flip side, opting for a low deductible plan makes you liable to pay higher premiums, because this is the only way an insurance company can offset your low deductible amount. On the other hand high deductible health insurance plans often require you to pay a lot less in terms of premium. However, here the risk is that if you are a healthy individual, you may never be able to spend your full deductible amount in one year. Although, some companies allow you to carry forward your deductible in next year, you can never be sure of. A safe option would be to choose a highest possible deductible plan that you can afford. This way you can reduce the premium amount while still getting coverage for most of the major expenses. However, even this plan is not foolproof.

Low Deductible Health Plans

Health Management Organization (HMO), Preferred Provider Organization (PPO) and indemnity plan are primarily the affordable health insurance plans which offer low deductible plans under US health insurance policies. HMO plans may have very low or even zero deductibles, but then you may have to pay towards copayments or coinsurance which are other out of pocket expenses. With PPO, you can avail low deductible plan only on certain medical expenses and that too if you seek medical service from select medical centers included in their network. If you choose to seek services of health care provider not included in their list, you will be liable for deductibles and other out of pocket expenses. Lastly, an indemnity plan provides you with the liberty of choosing your health care provider and covers most of the medical expenses, but then you will have to pay an additional coinsurance after your deductible is met.

Thus, one can truly get confused with all the plans available in the market. Hence, it is important to assess your financial position and possible health care services that you are likely to require, before choosing an insurance plan.