When you have a high deductible health insurance policy, you’re essentially agreeing to take on a significant portion of the initial medical expenses that you’ll encounter each year. While this type of plan is not right for everyone, it can be a good choice for individuals who:- Are young and healthy. The younger and healthier you are, the less likely it is that you’ll need regular medical care. And while being a healthy doesn't preclude your risk of having an accident that results in injury, the overall savings you'll experience on your monthly premiums can make facing this risk worth it. In fact, you can take the money you save on premiums and put at least part of it into a health savings account (assuming that you meet the qualifications) and then use those funds to pay your deductible should you have an accident. Since those funds rollover from year-to-year they will still be there should you need them to pay for medical expenses later on in life or for retirement.
- Need a tax deduction. When you have a high deductible health insurance policy with a deductible that meets IRS requirements, you can open a health savings account that allows for a large annual contribution which is tax-deductible. The limits for the contributions change from year to year but in 2012 they are $3,100 for a single-person account and $6,250 for a family account. There is an additional $1,000 catch-up contribution allowed for individuals over age 55.
- It's the only way you can afford health insurance. High deductible health insurance plans have an additional benefit that many consumers don't realize. When you have a high deductible plan, let's say with a deductible of $5,000, you’re expected to pay that first $5,000 worth of medical expenses but you are not doing so at the retail rate charged to consumers who don't have insurance. Instead, the insurance company works with your medical service providers to control the overall cost of treatments. In addition, by giving a defined deductible, they control the overall amount you’ll be on the hook for.
To learn more about the different types of Oklahoma City insurance policies and which might work better for you, give us a call at Alexander & Strunk Insurance today.
