How to Choose the Right Plan: High Deductibles or Low Deductibles?

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Each health insurance plan comes with different options for coverage. You can pay high monthly premiums for better insurance coverage during an emergency or illness. Or you can pay low monthly premiums for high deductible plans that will not offer as much coverage.

Jonathan Nolan
JPN Insurance

What Is a Deductible?

A deductible is the amount of medical bills you must pay before the insurance company covers your medical bills. For example, if you have a high deductible plan, you may have low monthly premium costs and even coverage for well checks and health screenings but little coverage when it comes to accidents or unexpected diagnoses.

If your deductible is higher than $1,400 per person, you have a high deductible plan. You will have to pay at least $1,400 per person before insurance starts to pay their portion of the medical bills.

On the other hand, low-deductible plans require you to reach your deductible quickly and then start receiving coverage from the insurance company for the medical costs. These plans usually come with higher monthly premiums.

One benefit of high-deductible plans is that you can save money in a tax-free Health Savings Account. When you use those funds to pay for medical costs, you will not be taxed when they are removed from the account either. HSAs offer huge tax savings.

When Is a High-Deductible Plan Right for You?

If you are in good health and maintain your health through well checks and health screenings, a high-deductible plan may make sense. When you do not have a medical emergency or chronic illness to address, your medical costs can be kept to a minimum with low monthly premiums.

If disaster strikes, be prepared to pay more with high-deductible plans. But at least you are not left with no insurance coverage at all. High-deductible plans will pay your medical bills once you reach the high deductible threshold.

And remember the high-deductible resets at the beginning of each year. So if you reach your deductible during a fiscal year, you will want to sign up for any other medical procedure you may need soon.

We are happy to help you choose the best health insurance plan for your situation. Call us at JPN Insurance Services to discuss the various options that are available: (951) 443-9925