Advantages of High Deductible Policies

If you are a self-employed entrepreneur looking into health insurance, the policy’s cost – and paying the lowest premiums possible – may be an important issue for you.
Here is a health insurance rule of thumb: The higher your deductible (the amount you have to pay out of pocket each year before the insurance company begins covering your care), the lower your premiums.
As a result, many entrepreneurs purchase high deductible health plans, or HDHPs – also known as “consumer directed health plans” – to keep their monthly premium payments low.
Under the Affordable Care Act, many HDHPs cover preventative services – prenatal care, cancer screenings, children’s dental checkups, etc. – without regard to your deductible.
Whether you’re seeking insurance privately through an agent/broker or an online exchange, you’ll find that HDHPs are typically among the most affordable in terms of premium payments. (Bear in mind that after you meet your deductible, you may still have to pay a copay and/or co-insurance for covered medical services and prescriptions.)
In addition, many HDHPs can be used in conjunction with a Health Savings Account, or HSA. An HSA is a special, tax-advantaged savings account that can be used to pay for qualified medical expenses. In 2018, individuals can contribute up to $3,450 – families can contribute up to $6,850 – to their HSA. It can be an effective way to have the federal government subsidize some of your medical expenses.

Game Plan

One of the first things to consider is how much you’re willing to spend in monthly premiums for your policy, versus how comfortable you’ll be with a high deductible. This is a budgeting question. There’s also some time and work involved in staying on top of both your plan and your HSA.
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