employer's health insurance Archives

Low Deductible Plan Vs. High Deductible Plan

low deductible vs high deductible plan text overlaying image of a scale with an up arrow on one side and a down arrow on the other with a piggy bank in the middle If you’re looking for a health insurance plan, you probably feel like you’ve had a lot of terminology to learn. Especially when it comes to the out-of-pocket costs that you’ll be responsible for with your plan. It’s true that there’s much more to plans than just monthly premiums. You’ll most likely have to think about copayments, coinsurance, and annual deductibles, as well. And it’s this last expense that we’re going to look at here. Your annual deductible is the amount that you will have to spend on covered medical expenses before your health insurance plan begins to pay its share.

And when it comes to deductibles, you actually have choices. You can choose a high-deductible health plan (HDHP) or a low-deductible health plan (LDHP). But what’s the difference between these types of plans? This article will guide you through the specifics of HDHPs and LDHPs. As well as how to determine which type of plan will serve your needs most effectively based on your needs.

High Deductible Health Plans

A high deductible health plan (also known as a HDHP). As the name implies, is a type of health insurance policy that has a higher annual deductible than other types of healthcare plans. This difference can even be in the four-figure range. Meaning that you will most likely have to pay thousands of dollars out-of-pocket for medical care before your plan will begin to cover any expenses.

With that being said, monthly premiums for these plans tend to be lower than for other plans. And you will still have routine preventive care covered in full before you meet your deductible. As with any ACA-approved plan. The actual deductible you will have if you choose a HDHP will vary depending on your plan and insurance company, but there is a minimum deductible amount for a plan to be considered a HDHP, which changes each year. For 2023, the minimum annual deductible for individuals is $1,500, while the minimum for families is $3,000.

Advantages of HDHPs

As mentioned above, if you choose a HDHP, you will have a plan with a high deductible. But lower monthly premiums. This means that if you know that you will most likely only use the plan for preventive care rather than more extensive medical treatment. You could save money by going with a HDHP.

Other than lower monthly premiums, there is one other big advantage to HDHPs. You can open a health savings account (HSA) in conjunction with a HDHP; in fact, in order to have an HSA, you must have a HDHP. HSAs can be a great way to help pay for your out-of-pocket medical expenses. They are tax-advantaged accounts that can be used to pay for qualified medical expenses that your plan doesn’t pay for. Such as acupuncture and dental expenses. Your contributions to your health savings account are not subject to income tax. And they can be used to reduce the overall cost of your high deductible.

Disadvantages of HDHPs

The high cost associated with these plans is the most significant and obvious disadvantage of HDHPs. If you have a higher deductible, it means that you are responsible for paying a greater portion of your healthcare costs out-of-pocket before your plan begins to contribute. This may put a significant dent in your financial resources. Particularly if you are forced to deal with unanticipated problems relating to your health.

Low Deductible Health Plans

One of the most significant differences between a HDHP and a LDHP is that a low deductible plan typically has a lower deductible. But a higher monthly premium payment.

Because of their lower deductibles, this type of plan is typically chosen by people who see their doctor more regularly. And who need more medical care. If this is the case for you, you might find that the higher amount you’re paying in monthly premiums is balanced out by the low deductible, since once you meet this lower amount, your insurance company will take care of your remaining costs. That could mean you’ll actually end up paying less out-of-pocket. In addition, LDHPs do not qualify for a health savings account (HSA), which is another difference between the two types of plans.

Advantages of LDHPs

Having a plan with a low deductible means you’ll have less to pay out-of-pocket if you need to access healthcare services more frequently, or if you have a true emergency or a catastrophic illness or injury, both of which can be very expensive. People who are older or who have a medical history that includes chronic conditions or illnesses may find that selecting a plan with a low deductible is the better option for them. Others who might benefit from this type of plan include:

Women who are pregnant or who have the intention of becoming pregnant
People who undergo a variety of specialized treatments or need expensive medications, such as those with cancer or on dialysis
Any individual who is contemplating undergoing a surgical procedure within the next year

Disadvantages of LDHPs

Plans with low deductibles tend to have higher monthly premiums, since insurance companies will only cover a greater percentage of your care if you pay a higher premium. These premiums can feel like a burden each month, and if you don’t end up using your plan as often as you thought you might, you could start to feel like you’re wasting money.

Who Should Choose a High Deductible Health Plan?

As we pointed out above, a HDHP might be a good choice for you if you are healthy and anticipate having few to no healthcare expenses. In these circumstances, the lower monthly premiums that you would be paying for your “just in case” plan (which will also cover your preventive care), would save you money over a more expensive plan.

In addition, if you can’t afford a low deductible health insurance plan, you can still get yourself at least some level of coverage with a HDHP. And it’s important to have a plan, even if it has a high deductible, because health insurers negotiate rates with providers. This means you will pay less overall for products and services related to your health if you have health insurance than if you do not have health insurance.

In addition, your high-deductible health plan (HDHP) will pay for necessary medical care, such as preventive services, if you purchase the plan on the individual market. But even if you have enough money to pay for a low deductible health plan, it may be worthwhile to consider a high deductible health insurance plan. Remember that if you have a high deductible health plan (HDHP), you can help to offset your out-of-pocket expenses with a health savings account (HSA).

Who Should Choose a Low Deductible Health Plan?

Again, a health insurance policy with a low deductible is likely to be beneficial to you if you are an older person, if you are not in good health, if you have a chronic condition. If you are planning to start a family, or if you simply make frequent use of your health benefits.

If you have costly health issues, purchasing a LDHP could save you money over the course of the year. Even with the higher premiums. If you switched to a HDHP, the amount you would save in premiums would be a much smaller fraction of the total amount you would pay in deductibles with your HDHP. And, frankly, many individuals find that it is simpler to pay a slightly higher amount on a monthly basis as opposed to a much larger sum all at once. Getting a low deductible health insurance plan might be the best choice for you if you don’t want to deal with the stress of potentially expensive medical care.

How to Choose

It is difficult to make a direct recommendation for a plan without knowing your unique financial situation and your health status. But we can offer the following advice to help you make a decision. Your best bet, though, is to speak to an EZ agent. Who can take your specific circumstances into account and find the best plan for you.

1.Look for discounts

You might be eligible for assistance with your monthly premiums or cost-sharing expenses, depending on your income. So, before you write off a type of plan as too expensive. Ask an EZ agent if you qualify for subsidies or tax rebates.

2.Narrow down your choices

Think about the maximum amount of money you are willing to spend each month on your premium and go from there.

3.Look at additional features

When it comes to shopping for health insurance, deductibles are just one of many factors to take into account. Consideration should also be given to the size of the plan’s network, out-of-pocket maximums, and the structure of the plan. As well as the types of costs that are covered. After you have made a comparison of your expected medical costs for the year with the coverage options available to you. Look more closely at the plans you are considering. Ensuring that they provide the appropriate type of coverage for the amount of money you anticipate spending on healthcare.

4.Set your priorities

Your choice between a high deductible plan and a low deductible plan may come down to what you value more. The ability to save money on premiums if you are fortunate enough to not have many medical expenses. Or the peace of mind that comes from knowing that you won’t have to pay a deductible if you do end up needing more medical care. Doing some number crunching before making your decision might make things simpler for you.

Let EZ Help You

Do you need assistance comparing different plans and choosing the one that is best for your budget and healthcare needs? EZ.Insure is here to help! We will connect you with one of our dedicated, highly trained agents. Who will discuss all of your options with you and assist you in selecting the insurance policy that meets your needs, all at no cost to you. That’s right, there are no hidden fees associated with any of our services. EZ.Insure makes the entire process simple, easy, and quick. To get started, simply enter your zip code in the bar below. Or you can speak to an agent by calling 877-670-3557.

Divorce & Health Insurance

Going through a divorce can be one of the most stressful and emotional experiences in someone’s life. Not only are you losing your partner and the dreams you shared, but also your sense of normalcy and routine. The future might suddenly seem very uncertain, and that includes uncertainty about the status of your health insurance. If you were on your spouse’s insurance plan, your children will still be covered, but you will not be once your divorce is finalized. Don’t worry, though, there are options available to you. Just make sure to look for a new plan within 60 days of losing your coverage.

COBRA

A temporary, but expensive, option for coverage after your divorce is applying for COBRA through your spouse’s employer. The COBRA law allows you to stay on your ex’s plan for up to 36 months after your divorce. The downside is that employers do not contribute to the cost of COBRA premiums, so you will have to pay the full amount. This might be quite expensive for you, but it could be a useful stopgap until you find a private insurance or Marketplace plan.

Employer Coverage

If you are working and your company offers health insurance, contact your HR department to find out if you can get on your employer’s insurance plan. Because you lost coverage due to your divorce, you can enroll into a new plan without having to wait until the open enrollment period. Companies with 50 or more full-time employees may be required to provide health coverage to all full-time employees, so if you work for a large company, consider looking into their plan.

Individual Insurance

illustration of caucasian woman with blue shirt and head gear sitting in front of a white computer. — *Working with an agent gives you the ability to ask about any discounts or lower rate options available in your area that you might not be able to access on your own.*

You can purchase your own individual health insurance plan for you or your family. You can purchase these plans over the phone or online with an EZ.Insure agent. Getting your own insurance plan will cost less than going with your ex’s COBRA plan, and it might offer more coverage. An EZ agent can sit down and go through all of the options with you, and compare them to the price and coverage you would receive through COBRA. Working with an agent also gives you the ability to ask about any discounts or lower rate options available in your area that you might not be able to access on your own. There are a variety of plans available, so there is no doubt EZ will be able to find you a plan that meets your needs and budget.

Marketplace Insurance Plan

Normally, if you want to enroll in an ACA Marketplace plan, you have to wait until the Open Enrollment Period from November 1 – December 15. But getting divorced qualifies you for a Special Enrollment Period, which means you have 60 days after losing coverage to sign up for a new plan. If you fail to sign up for a new plan within 60 days, you will have to wait until the regular Open Enrollment Period to sign up. You can shop your state’s exchange for an ACA-approved “metal tier” plan, and possibly find a discounted rate based on your income and location. If you are considered low-income, then you might qualify for some subsidies to help you save money.

Divorce is a devastating thing to go through, and losing your health insurance will only make things more stressful. EZ.Insure can make the process of getting covered less daunting, so that you have one less thing to worry about. Our agents are highly trained and can search for and compare insurance quotes within minutes at no cost to you. Our services are always free and there is never any obligation. Allow us to help you manage your health insurance needs during this difficult time – we promise to find you the best plan for your needs. To get free quotes online, enter your zip code in the bar above, or to speak to an agent, call 888-350-1890.

Peace of Mind: Offering Your Employees Cancer Insurance

It is one of the most dreaded words that someone can hear at the doctor’s office: cancer. When facing a diagnosis of this disease, a lot of people’s minds will race as they begin to worry about treatments, prognosis, and their family. But they will also, unfortunately, have to think very seriously about the financial impact of their illness. Since 1 in 2 men and 1 in 3 women will find themselves in this situation, it may make sense for you to offer cancer insurance to your employees.

The Cost of Care

While it’s hard to accurately estimate the average cost of cancer treatment, AARP puts the average cost at $150,000. Chemotherapy can run anywhere from $1,000 to $12,000 per month, radiation can cost upwards of $9,000 per month, and other treatments like immunotherapy can add $10,000 – $12,500 per month.

calculator on a table with papers with a lot of numbers and coins being pinched with wrench — *Chemotherapy can run anywhere from $1,000 to $12,000 per month, which no one can really afford.*

Eleven out of the twelve cancer drugs approved by the FDA are priced at at least $10,000 per month. Even with the typical group health insurance plan, an employee with 25% coinsurance would have to pay $2,500 for a cancer drug that costs $10,000 a month. According to the U.S. Bureau of Labor Statistics, the average monthly salary for U.S. workers is $3,600. If this is the case, then employees hit with a cancer diagnosis could be facing bills that are 70% of their monthly income.

AARP puts the estimated yearly out-of-pocket costs of cancer at around $4,000, and some groups put that number at upwards of $20,000. Unfortunately, these aren’t the only costs that those battling the disease will face. Surveys have shown that 50% of cancer patients were financially impacted by travel costs related to their disease, while a quarter cited hardships due to lost wages. All of this can lead to patients skimping on drugs, falling behind on bills, and struggling to feed their families.

How Employers Can Help: Offer Cancer Insurance

There is a way employers can offer some peace of mind to employees worried that a cancer diagnosis could upend their lives. Cancer insurance is a supplemental policy that helps cover additional expenses that aren’t covered by a typical group health insurance plan. Costs to the employee will vary by age, location, etc but on average they will pay from $8 – $100 a month on top of their normal premiums.

Types of Cancer Insurance Policies

caucasian hand holding a bubble with a stethoscope in it — *There are various cancer insurance options that you and your employees can choose from.*

There are various options that you and your employees can choose from. The main types of cancer insurance policies are:

Expense-incurred policy: a policy that pays a percentage of all covered treatments. These plans usually have a maximum dollar limit. Most of these plans require you to pay out of pocket, and will reimburse you.
Indemnity policy: similar to expense-incurred policies, except each treatment has fixed payout limits.
Lump-sum cash: with this policy, insurers will pay out a predetermined amount of cash, which can be used by the beneficiary in any way they choose.

While the first two types of policies can be helpful in mitigating the overwhelming cost of cancer treatment, a lump-sum cash policy is the most flexible, as the money can be used for anything. Other plans will cover, to varying degrees, such cancer-related costs as:

Copays and deductibles
Procedures and treatments
Doctor and hospital care
Travel and lodging
Everyday expenses (mortgage/rent, childcare, groceries, utilities)

As an employer, you may want to consider offering cancer insurance to your employees as an add-on benefit. Employees who feel they are at higher risk of being diagnosed with the disease, or have families dependent on their salaries, will appreciate being given the choice to expand their coverage.

It is also important to remember that cancer costs working age adults $94 billion a year in lost wages, and cancer patients are 2.5 times more likely to declare bankruptcy as healthy people. It makes sense to offer protection to your workforce, especially since cancer insurance is relatively affordable as compared to other types of benefits.

If you need help with any aspect of offering health insurance benefits to your employees, EZ.Insure can help. Whether it be questions on what plan will work for your company, how much plans are in your area, or how to compare plans, we can do it all for you . Call 888-998-2027 to speak directly with one of our agents, or enter your zip code in the bar above to get free instant quotes. We will never sell your information to telemarketers as others do.

Tag: employer’s health insurance