What’s the difference?
Deductible amounts are the obvious difference between low- and high-deductible health plans. Many high-deductible health plans, especially those You Med Premium costs vary, but plans with higher deductibles tend to have lower monthly premiums than those with lower deductibles.with the lowest premiums, have deductibles close to their out-of-pocket limits, often $5,000 or more.
Plan type also affects your eligibility to use a health savings account (HSA).
Only people with qualifying HDHPs are eligible to open and contribute to HSAs. HSAs are tax-advantaged, meaning that you can direct funds from your paycheck into an HSA pretax, or you can add the money post-tax and deduct taxes later. An employer may also contribute to your HSA.
HSA money earns interest, can be invested in stocks or mutual funds, and spent on any qualifying medical expense, as defined by the IRS. You can contribute to one as long as you have an active qualifying high-deductible plan and no other health coverage.
Qualifying HDHPs follow certain rules set forth by the Internal Revenue Service. They must have:
- A minimum deductible of $1,350 for an individual or $2,700 for a family in 2018.
- An out-of-pocket spending limit of no more than $6,650 for an individual and no more than $13,300 for a family in 2018.
Not all HDHPs qualify you for an HSA, so make sure any one you choose meets all three requirements above.
Who should consider a high-deductible health plan
Though high-deductible health plans involve greater out-of-pocket costs, they still save some consumers money.
A high-deductible health plan might be right for you if:
- You’re healthy and rarely get sick or injured.
- You can afford to pay your deductible upfront or within 30 days of receiving a bill for that amount if an unexpected medical expense comes up.
- You have the means to make significant contributions to an HSA each month.
- You are healthy and are interested in using an HSA as a way to save or invest money.