Who should buy Catastrophic Health Insurance or a High Deductible Plan? Any one that doesn’t have access to a good group policy. What I find simply amazing is those that advise one way or the other seemingly not knowing even enough to suggest a dollar Vs dollar comparison. When comparing health plans, always have your agent to an actual dollar Vs dollar comparison between plans, if they don’t know enough to do, that then one should seek another Agent!
Fact is this, practically in every case a High Deductible plan will be cheaper, it will be cheaper if you use it or if you use it a lot! Now the traditional plans are favored by some, and I can see that. Generally speaking families with children between Newborns to 13 years of age that feel the protection of the $25 dollar Co Pay is worth the extra cost due to the security of the cheap visit to the Dr and the security of Co Pays in general. Yet even with having the knowledge that the High Deductible plan may be cheaper in the long run but the ability to spread out the cost in a practical manner is given more weight then savings and the tax advantage of the HSA that can always be combined with some High Deductible plans. Yet, a good High Deductible plan is always cheaper because of a simple principle in Insurance that says “First Dollar Coverage” is always the most expensive because that is the highest cost to the Insurance Company, pretty simple once you understand that.
Main thing to consider, is the Contract or the Plan, all are not equal and this is where a good Agent comes into play. I would highly suggest plans that have no less then a 3-5 million lifetime benefit at minimum, some go as high as 8 million lifetime benefit. Consider companies that have years of coverage within the State you live in, some companies will enter a State and offer cheap premiums at first but always have to increase premiums after the first year or two that can be “Catastrophic!”. If available the two to three year premium price guarantee should be sought out. Health Carriers that offer “Healthy” discounts, you stay healthy and don’t use over a certain $$ amount and you get up to 10% discount in the next year.
Now how can the High Deductible Plan or the HDP be cheaper then the traditional plan if I use it a lot? How can a plan that states that the first $5,000 be cheaper then a traditional plan that I only have to pay $25 to see my Doc? Two things, first is obvious, the premium dollar savings, yet the second is where a lot of people overlook till they actual get sick or injured and they get hit by the Co Insurance! Most traditional plans that are affordable now come with 80/20 Co Insurance with a Out of Pocket Maximum of $2,000 to $5,000! So if you have to use your plan not only have you paid higher premiums but the Co Insurance (with many plans now having no limits) will blow your cost well above the cost of a HDP. Now as far as Pharm’s benefits, seek a HDP that includes Med’s! They are out there and do cost a little more but once again seek out a Agent that knows the Plans that are available in your State. That is what is so complicated, every State has different laws, mandates etc etc so seek out an Agent in your State that can show you TRUE comparison between traditional plans and the HDP and always ask about the HSA qualified plans that can save you dollars via tax deductions and credits.