Whether you are shopping for a new insurance plan, or you already have one and are looking for ways to save money, it is important to take a look at the benefits of a High Deductible Health Plan (HDHP). While a High Deductible Health Plan may not be for everyone, there are some attractive qualities.
1. Lower premiums. The deductible may be higher and you’ll have to pay more out-of-pocket expenses as health expenses come along, but your monthly premiums are lower. High deductibles allow your health insurance coverage to be more affordable and a better fit for your budget since your premiums are a reoccurring spending.
2. You can become eligible for an HSA account. Health Savings Accounts (HSAs) is an account where you put money into it, so the funds can be used when health expenses arise. The funds out into the HSA are not subject to federal income tax and gain interest on the money you deposit and can be withdrawn, tax-free, for health-related expenses. These expenses also roll over and accumulate year to year.
3. If you’re in good health, you save. When you’re in good health your expenses are usually less than the deductible. Meaning you have less doctor visits, less prescriptions, less hospital visits, to pay for out-of-pocket, so the deductible essentially does not matter.
4. After 64, you HSA withdraws are tax-free. If you choose to do a High Deductible Health Plan and go the Health Savings Account route; you can withdraw from the HSA balance, for any reason, after you reach the age of 64-years-old, tax-free.
5. High Deductible Health Plan is typically a PPO. A Preferred Provider Organization (PPO) usually adds flexibility to get coverage for out-of-network health care providers. An HDHP can give you the flexibility to see out-of-network providers.