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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,