The Logic Behind High and Low Deductibles

 

When signing up for insurance, one of the most important questions you will be faced with is whether to opt for a high or low deductible. Each has their advantages, but choosing the best option can be a task for you and your family. Understanding each option will help you make an educated choice.

One advantage to choosing a high deductible is saving as much as $400 every month in health insurance costs. The higher your deductible, the lower the cost of your monthly premium. This keeps money in your pocket on a regular monthly basis.  However, you are also betting that you will not incur any major medical expenses, because if you do, you will be largely on your own to cover the cost.

The downside of choosing a high deductible is that initial out-of-pocket expenses can be up to $5,000 when the medical bills begin to roll in. Expenses that exceed your deductible are then paid by your insurance company. However, because most companies only pay a certain amount of the costs, you may find yourself also responsible for additional expenses.

If you are considering a high deductible, it is a very wise move to invest in a Healthcare Savings Account (HSA) is a wise move. An HSA is similar to a retirement fund: it’s a tax-free health care fund in which you can invest up to $3,000 for the year. The money in HSA continually grows throughout the year and is there when you need it.

A low deductible costs more upfront but pays off in the case of an emergency. These premiums are much more expensive than those of a high deductible. However, you will enjoy far more insurance benefits if you ever have a health emergency.  

With a low deductible, the insurance company is obligated to pay for a much bigger portion of your medical bills. A low deductible also could mean that your company starts paying bills much sooner than if you had a high deductible. Since it is impossible to predict if you have unforeseen medical emergencies, this option is a great way to safeguard against massive and unmanageable bills. This option is a good one for families, and gives you the comfort of knowing that your health insurance will not cause any huge changes that will affect the lives of your kids. It never hurts to be prepared.
Whether a high deductible or a low deductible is right for you really depends on your financial situation and your expectations. The BeneChoice Companies can help you evaluation which option is better for you and ultimately which choices are perfect for you, your family, and you future.

Highest regards,

Stacia

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Disability Insurance: The Omitted Employee Benefit

You may have noticed the three letter code LTD on your paycheck next to a small dollar amount that is deducted every period. It stands for long-term disability insurance, and it pays to have it to help continue to provide for your family if you become injured or ill. Unfortunately, many employees go without it. Despite more and more employees offering long-term disability insurance as a benefit to their employees, the number of employees who opt-in is going down.

The Council for Disability Awareness, a group that represents 19 member insurance insurance companies, found this troubling trend in its latest review of claims data in 2013. Over 213,000 employers offer long-term disability through those companies, which is a slight increase from data collected in 2011. Yet the number of employees receiving the coverage declined approximately 1.5% to 32.1 million last year.  

Barry Lundquist, president of the council, cites a couple reasons for this change: primarily that employers are focused on compliance with the Affordable Care Act’s health insurance provisions, which causes employers to decide to deal with other benefits like disability later.

Additionally, employers only offer disability insurance as a voluntary benefit, meaning that the employee pays the full cost. Historically, the employer has paid for it, or paid a portion. In that case, the employees would be automatically enrolled. With voluntary plans, enrollment stagnates at about 40%, Lundquist says.

Likely due to the improving economy, the number of people receiving long-term disability payments declined for the second year in a row. Yet total claim payments increased by 1.6% to $9.8 billion in 2013.

If you do have disability insurance, it is important to determine what you do have and if it’s enough. A typical benefit would be 60% of your salary, up to a $5,000 monthly payout. Check if your employer allows you to buy more coverage (extra premiums can be really cheap). If your employer coverage isn’t enough, consider buying a personal policy.

Highest regards,

Stacia

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