High Deductible Vs Low Deductible - How to Choose?

Note: If you need definitions of health insurance relatedMonthly Premium: $850
terms, simply click "Free PA Quotes" at the end of thisDoctor copays: $20
article.Deductible: $0
The average consumer tends to assume that lowCoinsurance: $0
deductible health plans (LDHP) are more benefit richMaximum Out of Pocket (OOP):$0
then their high deductible (HDHP) counterpart. You mayYearly Cost (excluding copays):
be surprised to find that in most cases, both forms of$10,200
health coverage are equally comprehensive. It isPolicy 2 (High Deductible Health Plan - HDHP):
important to consider your individual situation toMonthly Premium: $450
determine what is ultimately best for you. Knowing theDoctor copays (pre-deductible): $20
relative strengths and weaknesses of each type ofDeductible: $2500
plan will put you in optimum position to maximizeCoinsurance: 20%
savings.Maximum OOP (including deductible): $5000
Since becoming a licensed agent, I have worked with aYearly Cost (excluding copays) if full deductible is
large array of prospective customers who, for a lackreached:
of better words, love their health plan. That is aside$7900
from just one thing - the cost. Usually, the story goesSavings on Policy 2:
something like this:$2300 (potentially more if deductible is not reached)
"I love my health plan; there is no deductible, I only paySo, which plan would you choose - does the LDHP still
$10 to see the doctor, my labs don't cost me anything,look like a viable option to you?
if I go into the emergency room it only costs me $50,While policy one's $0 deductible looks attractive at first
and if I go into the hospital - I only pay $200. If I onlyglance in comparison to policy two - how does it work
have one issue, it is a bit expensive at $850 a month."out in the end when you account for the overall
The reason why some consumers have a virtual loveincreased cost of the first policy?
affair with their health plan (in spite of the cost) is theyThere is no question, from a strict dollar for dollar
feel that their health plan is in some form, the envy ofstandpoint, policy two certainly seems to be the better
those around them. This is little more then a falsechoice.
perception about one plan being better then another.But let's play devil's advocate and switch gears again.
The reason why this perception exists is that HDHP'sIn the above comparison we are reviewing perhaps
tend to receive the bulk of consumer complaints. Arethe most important variables that determine the cost
the complaints justified? Let's look a little bit closer...of a policy. However, they are not the be-all end-all of
Usually, the HDHP story goes something like this; "Theshopping health insurance. When you account for the
other day, my son fell off the swing. We weretendencies of human nature, it's possible that a HDHP
concerned that he broke his arm and decided to take(like policy two) can actually pose higher risks to the
him to the emergency room. As it turns out, it was littleconsumer. How is this, you say? For one thing, many
more then a deep bruise. Unfortunately, we just gothigh deductible policy holders tend to put off minor
the bill in the mail and we had to fork out $250. Do youpains and ailments to avoid the out of pocket
believe that, what's the point in having insurance if I stilldeductible costs. This potentially lends itself to some
have to pay so much money? I didn't know a bruiseconditions becoming worse that might have been
could be so expensive.resolved if treated earlier. Also, for some consumers
In another case, we might hear of a friend who has towho are less "savings conscience" they may find that
pay $1500 dollars for an MRI - OUCH! But it getstheir lack of discipline puts them in a compromising
worse. In the event that they have to use theirsituation in the event that they have to incur
insurance again, they still would have to pay $1000 outunexpected deductible costs.
of pocket before reaching their annual deductible. ToAnd yet, there are still other variables to consider.
add insult to injury, even after they reach their highWhether it's a HDHP or a LDHP, some plans may cap
deductible, they still have to pay 20% coinsurance forcertain forms of treatment. This is an important
who knows how long...and on and on it goes...consideration, and you may want to evaluate your
When the proud owner of a low deductible health planhealth history to see how this might potentially affect
hears of such horror stories, they wipe their brow andyou in the future. Also, max. OOP does not necessarily
with a sigh, write another $850 check for this month'smean that this is all you will be paying once that level is
premium.reached. Most plans have copays for hospital stays
But does the seemingly enviable low deductible policyand other services, even after the max OOP has
holder have cause to feel the way they do? Whenbeen reached. With high copays, the costs can quickly
you take a closer look (keeping a calculator handy)add up. While some copays look attractive
you may find that enviable friend of yours...should bepre-deductible, they are just an extra expense -
envying you.post-deductible.
While there are many variables to consider for anyConsider speaking with a state licensed agent who will
health policy, let's get out a calculator out and compareconsider these variables when helping you shop for
a couple of policies:health insurance.
Policy 1 (Low Deductible Health Plan - LDHP):