High-deductible health plans (HDHPs) are characterized by higher deductibles and lower monthly premiums compared with a typical health plan. HDHPs may reduce, or delay, needed care, which will ultimately lead to poorer access to care for chronically affected participants.
Large medical expenses: Since HDHPs generally only cover preventive care, an accident or emergency could result in very high out-of-pocket costs. Future health risks: Because of the costs, you may refrain from visiting a physician, getting treatments, or purchasing prescriptions when they're not covered by your HDHP.
Namely, you're responsible for paying a larger portion of your healthcare expenses out of pocket. This can be a significant financial burden for those with a lot of medical expenses and could lead to financial strain. HDHPs may not be the best choice for those with chronic or frequent medical needs.
HDHPs can be a good form of insurance for the young and healthy — especially if your employer offers you HSA contributions. But for anyone with significant medical expenses, an upcoming surgery, or a serious health condition, a PPO could be a better fit because of the lower deductible.
HDHPs have higher out-of-pocket costs than LDHPs. So, this type of plan is best for healthy people who expect little to no healthcare expenses. If this outlines your scenario, the HDHP's lower premium will likely save you more money than you would spend on medical care.
HMO plans might involve more bureaucracy and can limit doctors' ability to practice medicine as they see fit due to stricter guidelines on treatment protocols. So just as with patients, providers who prefer a greater degree of flexibility tend to prefer PPO plans.
HDHPs Are Increasingly Popular
For many people, HDHPs are a practical way to control the rising cost of health plan premiums. When paired with an HSA, HDHPs can also help employees save for retirement while offering a safety net in case of unexpected health issues.
The primary disadvantages of a high-deductible health plan include the high out-of-pocket costs and the potential reluctance to seek medical care due to upfront expenses.
A high-deductible health plan covers the cost of certain prescription drugs that are considered “preventative.” Drugs that aren't considered preventative must be paid in full if you haven't yet met your out-of-pocket deductibles.
The main drawback of an HDHP is high out-of-pocket expenses for nonpreventive care. If you're healthy but go to urgent care a few times, you can pay a lot out of pocket but not exceed your yearly deductible. Or you could require unexpected expensive treatment early in the year.
GoodRx can be used whether you have insurance or not; you can simply opt not to utilize your plan's benefits when purchasing a medication. This may be of interest to you if you have a high deductible plan or don't get adequate coverage for a prescription.
This means you'll pay less each month for insurance and more out-of-pocket when you receive care. The upside? Preventive care is still covered at 100 percent on these plans. Once you hit your deductible, your health plan will start to cover the cost of your other care.
Under the last-month rule, if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers), you are considered an eligible individual for the entire year.
For insured adults who are ill, having higher deductibles would mean they would be more likely to have difficulties paying medical bills or accumulate medical debt: 59 percent of sick adults with deductibles of $500 or more would experience medical bill or debt problems, compared with just 24 percent of comparatively ...
Cons of High Deductible Healthcare Plans
Individuals who are stretched thin for funds may delay or avoid seeking medical treatment due to the high cost of treatment. For example, someone injured may avoid the emergency room if they know it will result in an expensive bill that will be applied to the plan deductible.
The size of your monthly premium impacts your deductible—typically, the lower the premium, the higher the deductible. Why does having a higher deductible lower your insurance premiums? Because you'd be taking on more costs if you actually need care, rather than paying more each month toward potential care.
A plan that has a deductible of at least $1,400 (for individuals) or $2,800 (for a family) is considered a high-deductible plan. If your insurance plan has a low deductible, this means you may reach the threshold earlier and get cost-sharing benefits sooner.
On the flip side, a traditional PPO plan typically has a lower deductible and lower out-of-pocket maximum than an HDHP. For example, let's say you receive a medical bill for $5,000. Under an HDHP, your deductible might be $3,000.
Lower Premiums: The most significant advantage of a high deductible is lower premiums. If you're looking to reduce your monthly or annual insurance costs, increasing your deductible is one way to do it.
An HDHP is best for younger, healthier people who don't expect to need health care coverage except in the face of a serious health emergency. Wealthy individuals and families who can afford to pay the high deductible out of pocket and want the benefits of an HSA may benefit from HDHPs.
Dental PPOs are the most common commercial dental plan types and offer more flexibility in dentist choice. Dental HMO plans charge lower premiums but limit coverage to in-network dentists for most procedures. Consider your needs, budget, and dentist preferences when choosing between HMO and PPO plans.
Before choosing a health insurance policy for yourself, your family, or your employees, you must know what types are available. Some popular health insurance policy options are: Preferred provider organization (PPO) plans. Health maintenance organization (HMO) plans.
Cons of HMO Plans
Referrals Needed for Specialists: To see a specialist, you must first get a referral from your primary care doctor, which can delay care. Less Flexibility: If you often need care outside your network or prefer more choice in doctors, an HMO may feel restrictive compared to a PPO plan.