Is a Higher or Lower Deductible Better With Health Insurance?

If you take a costly prescription or make frequent doctor's appointments, you might want a low-deductible plan.

If you take a costly prescription or make frequent doctor's appointments, you might want a low-deductible plan.

The advent of the Affordable Care Act means an increase in health care choices. But more choices can mean more confusion, and you might find yourself wading through pages of plans on several different sites. There's no single correct strategy for buying health insurance. Instead, you'll have to evaluate your personal finances, health care spending and health to determine whether you should purchase a plan with a high or low deductible.

High-Deductible Basics

The primary benefit of a high-deductible plan is that your health care premiums are lower. In most cases, you'll have to hit your deductible -- which can be several thousand dollars -- before any benefits will kick in. Consequently, high-deductible plans are mostly designed to cover emergencies and life-threatening illnesses. Some plans, however, offer limited benefits such as a low copay for doctor's visits or prescription drug coverage before you hit your deductible. Under the Affordable Care Act, most plans also are required to cover basic wellness visits and preventive care, even if you have a high-deductible plan and haven't met your deductible.

Low-Deductible Basics

With a low deductible, your premiums will typically be higher, but you'll be able to access your health care benefits more quickly. Your deductible might be only a few hundred dollars, and a few doctor's visits can quickly knock this out. Low-deductible plans are ideal for people who make frequent doctor's visits or who are under regular medical supervision. With such a plan, you can end up paying thousands more in premiums every year but less at the time of medical services.

Examine Your Health Care Spending

Before you make your decision, take stock of your history of health care spending. Try tallying up the amount you'll spend on premiums and comparing it to how much you spent out-of-pocket last year. If you tend to spend a lot of money on health care, you can save money with a lower deductible plan. If, like many younger people, you rarely use your health care benefits, a higher deductible could put more money in your pocket.

Evaluate Your Health

Your current health can give you an idea of what plan will work best for you. If you're young and relatively healthy, with no major health risk factors, a higher deductible plan can protect you if you have an accident or contract a serious illness. But if you tend to get sick a lot, have an illness that requires regular treatment or rely on costly prescription drugs, a lower deductible plan is probably the better choice.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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