It would be difficult to be unaware of the debate surrounding health insurance today.
As the Affordable Care Act jumps into the already-muddied waters surrounding health care and its rising costs, topics for debate and discussion are legion. One of these is the high deductible health plan, or HDHP. Simply put, HDHPs offer lower monthly premiums in return for significantly higher deductibles, or the amount of money you have to pay out of pocket before insurance kicks in to cover all or part of your health care costs. When my family was offered the choice between a traditional plan and a HDHP with an Health Savings Account, or HSA, we chose the high deductible plan and never once looked back.
Here are 5 reasons I love my high deductible health plan:
The math works.
I have a rule of thumb when it comes to finances and financial products. Always look at real numbers. Articles and posts about the pros and cons of any category of insurance are helpful in understanding how policies work and any potential pitfalls, but virtually meaningless when it comes to making an actual choice. In our case, the available options offered similar coverage once the deductible was met, so I took coverage out of the equation. Then I added the yearly premium, the deductible (I assumed we’d have to pay it), and the remaining amount until the out-of-pocket maximum for each of the choices we were offered. I was surprised to find that the high deductible option actually saved us a bit of money. (My husband’s employer puts $900 into our HSA at the beginning of the year, which puts the HDHP in the top spot by about $250.)
Preventive care is covered at 100%.
As with all plans under the Affordable Care Act, HDHPs cover preventive care at 100%, so it’s not like I’m pulling out my debit card every time someone in my family sees the doctor. All of our check ups, well visits, and vaccines are covered, the same way they would be with the more expensive plan.
We hit the deductible and the world didn’t end.
Actually we’ve hit it more than once. This is important, because it is the piece that makes the HDHP work for my family. When we made our health care election, I started off by directing the difference between the traditional plan premium and the HDHP premium into our Health Savings Account (HSA) each month. (Because contributions to an HSA are pre-tax, putting the difference in premium into our HSA has exactly the same impact on our income as paying the larger premium for the traditional plan.) The result was that the amount we saved each year was nearly equal to our deductible. (This is why it is so important to work with actual numbers from actual plans – it’s the only way to find that out.) In the years we’ve had significant health expenses, we were able to meet the deductible with no problem, and the money we paid out of pocket once insurance kicked in at 80% was already available in our HSA from previous years.
I have the potential to keep significantly more of my money for retirement.
The thing to remember about premium dollars is that once they are paid, they are gone. No getting them back if your healthcare costs are lower than the amount you are paying each month. But deductible dollars are another matter.
I put deductible dollars into my HSA each month, but I only pay them out for care my family needs, which means that if we don’t need them, I get to keep them. Meeting the deductible is by no means a regular occurrence for my family, so we would be just fine continuing to contribute the premium difference to our HSA. (Even if we did meet our deductible each year, the math still argues for keeping the same plan.) However, since we don’t meet the deductible each year, our HSA has grown, tax-free. In fact, we now contribute the maximum allowed by the IRS, even though it exceeds our deductible, because that money can be invested and earn a return, or used for health care expenses at any time. It should be abundantly clear to anyone who spends time on the internet that extra money to put toward health care in retirement is never going to be a bad thing.
I make better choices with my healthcare dollars.
Obviously, I am enamored of the economic benefits of our high deductible health plan. There is, however, an argument to be made for a larger benefit. Going down this road has taught me to be aware of where my healthcare dollars are going, and to make careful choices about how and when my family receives care. And responsible choices by individuals have broader implications for the state (and cost) of healthcare in our society.