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Health Insurance Deductibles

This is a question that I am frequently asked:

Is it better to have a health insurance policy with a lower premium and a high deductible, or a higher premium with a low deductible?

The answer is:

It depends.

The reason for this is that there are usually other factors that are very important. For example:

-Do you need to go to the doctor frequently (like for physical therapy), or maybe 1 or 2 times per year?

-Will you need very expensive treatment (like surgery) that might cost $30,000 or more?

-Do you need to take expensive medications or maybe just a couple low cost generics?

-Are you planning to have a baby? If so, do you expect a vaginal birth or a C-section?

-Will your peace of mind or ability to sleep well depend on choosing a high or low deductible?

-Will your budget be a major factor in your choice?

Generally, if I am talking to a fairly healthy person, I will advise a higher deductible plan with very common benefits (like copays for doctors visits) and a lower premium, as opposed to a higher premium, lower deductible plan.

The reasons are:

-Savings in premium over the long haul will be higher than the payout for one bad year (someone may have a bad year, but not usually several bad years)

-The max out of pocket (moop) for a low deductible plan is often similar to the moop of a high deductible plan, so a very expensive procedure may result in the same out of pocket payout with both options. Considering that, I would rather at least pay lower premiums

-90% of medications are available in low cost generics. High drug costs are one of the BIGGEST reasons someone feels the need for a low deductible plan. Most people will not need anything beyond low cost generics

Feel free to contact me with questions or for quotes.


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