High Deductible Insurance Plan

Keys to Choosing the Right Health Insurance Coverage

The downturn in the economy has forced many people into self employment and into the hunt of finding individual health insurance. While the Internet has made it easier to compare and buy health insurance, learning some key insurance terms and taking stock of your needs before you start shopping will eliminate much of the hassle and time obtaining coverage.

Determine What You Need and Can Afford

Before you even start your insurance search, you need to determine what you want out of a health insurance plan and what you can afford to pay. “Sometimes people find health plans that meet their budget, but doesn’t take care of their health,” says Ellen Laden, a spokeswoman from United Healthcare’s individual business. “As elementary as it sounds, determine what you’re looking for.” Take into account things like having a lot of kids (which means many trips to the doctors), medications and dental coverage--this will eliminate unsuitable plans and make the comparison process easier and more exact.

Understand What a Deductible Is

Many people coming from a group insurance plan experience sticker shock when they see how high the deductible, or out- of-pocket expense, that comes with some health insurance plans. While higher- deductible plans mean you have to pay more out of pocket in certain cases, they also have a lower premium, which makes them more attractive to some people.  “People need to realize that picking a higher deductible doesn’t mean you have to have $5,000 in the bank in case something happens. Every hospital will work people to make payments,” says Carrie McLean, a licensed insurance agent for eHealthInsurance.com .  Although a higher-deductible plan may not be for everyone, McLean advises if the alternative is no health insurance at all then go with a high-deductible plan.

Co-Insurance, Co-Payments and HSAs:  Key Terms to Know

Many health insurance plans require the holder to contribute to coverage payments. That contribution is call co-insurance and is the portion you have to pay after the deducible. According to McLean, a popular co-insurance plan is an 80/20 plan in which the insurance company pays 80% of the plan and the consumer picks up the rest.  A co-pay is a flat fee you’ll have to pay every time you visit a doctor or specialist, or the amount you pay for prescriptions. That amount can vary from one plan to the next. A Health Savings Account or HSA is a medical savings account in which consumers can contribute tax-free funds each you to go toward medical expenses.  HSA plans are typically associated with high-deductible plans.

High-deductible insurance plans are gaining popularity ...

WASHINGTON — Last year, Tina Holwin Hodges' healthy family switched to a high-deductible health insurance plan and were able to save $100 a month on their monthly premiums, which seemed like a bargain.

Then her daughter Cailee spent three days in the hospital with a viral infection, her daughter Heather went in for a cardiac workup, her husband had hand surgery after being out of work for a year, and she injured her back and couldn't work for three months. Hodges found that her family plan with a $2,400 deductible and a $11,900 maximum on out-of-pocket spending was too much of a burden. Rather than paying a $20 co-pay per visit to the doctor, her family paid 20% of each visit until they reached their deductible.

"It was the unexpected stuff that got us," she said.

This year, Hodges, who works as a nurse at a Chicago hospital, and her family have opted into a traditional, low-deductible plan.

"I went back to the HMO," she said. "The high-deductible plan really didn't help me."

In 2007, about 4.5 million people had high-deductible plans, but by 2010, 10 million people had signed up for the plans, according to an America's Health Insurance Plans survey of its members.

In exchange for a high deductible — a maximum $3,000 deductible for individuals and a $6,000 deductible for families, for instance — people can save about $85 to $100 a month on premiums.

"People are choosing higher deductibles for lower premiums," said Karen Ignagni , president of America's Health Insurance Plans, which represents 1,300 companies providing health insurance to more than 200 million Americans.

It's important that they understand those lower premiums can mean higher doctors' bills, she said.

Yet in a RAND Corp. study released in April, researchers found that even as health care costs continued to rise, people on high-deductible plans paid substantially less than did those on traditional plans.

RAND researchers also found that people on high-deductible plans — no matter their income level — received less preventive care: fewer annual exams, fewer cervical cancer screenings and fewer colonoscopies.

Studies have shown that people don't know that their plans waive fees for preventive care, researcher Amelia Haviland wrote in the report.

Last year, Dorie Griggs, a communications and faith consultant based in Roswell, Ga., purchased a high-deductible plan because she works freelance and the high-deductible plans were cheaper. Griggs has a cavernous hemangioma — or dilated blood vessels — in her brain that must be monitored every year with an MRI. Because the test is expensive — from $1,500 to $4,000, depending where a person lives — she decided to get the scan every two years.

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