High Deductible Health Insurance Plans
If you're looking to cut your health care insurance premium, one route is a high-deductible insurance plan. Proponents like to call high-deductible plans "consumer-directed health care plans." In exchange for a relatively low annual premium, your insurance doesn't kick in until you've met your deductible, which is often $3,000 or more.
The low premium is the main appeal for high-deductible plans. When you do meet your deductible, you're still likely to have a co-pay or co-insurance for your medical needs. A co-pay is the fee you pay when you visit a doctor; co-insurance is the percentage of the total bill that you pay.
For many people, the low monthly premium is worth the high deductible. High-deductible plans are typically yoked with a health savings account or flexible spending account, which allows you to save money on a tax-deferred basis for health care costs. While you're still paying real money out of pocket, the tax savings ease the pain a bit. Health savings plans can roll over balances from one year to the next, and your employer may also contribute to it.
For many people who like relatively uniform costs and dislike the possibility of big costs, then traditional health care plans are probably best. And that's particularly true if you have ongoing health issues.
If you're young and healthy and broke, a high-deductible insurance policy could be a good idea, provided you're not a hang-glider. Similarly, if you're older and healthy and have a good savings cushion, a high-deductible option is a nice way to save on premiums.
In any event, when you are shopping for plans you need to weigh out all the options for each individual situation. The world of health insurance is not a one size fits all solution!