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High Deductible Health Insurance Policies

High deductible policies, also called consumer-directed healthcare, are insurance plans in which the policy holder pays a lower premium on a month-to-month basis and a higher deductible for doctor's visits, accidents, or unexpected illnesses. While the monthly payment is lower, the deductible the policy holder pays in the event of an accident is higher. This insurance approach is intended to encourage consumers to make their own decisions about medical needs rather than having the insurance company dictate where the consumers can and cannot go. This freedom appeals to many consumers. The idea of higher deductibles and less insurance involvement was also created to make consumers more conscientious of their healthcare spending because the money is coming from their own pockets rather than from the insurance companies. As a result, individual health insurance costs could lower for everyone.

Some companies choose to pay half the deductible for their employees to make this plan more affordable. One company switched to a high deductible policy, which caused the annual deductible to rise from $1000 to $2200 per employee. To alleviate the cost, this company pays half of the deductible. Paying $1100 per employee is less expensive for the employer than the monthly premium had been with the previous insurance plan. High deductible policies increase the policy holder's exposure in the case of an accident, but it decreases the monthly premium payment.

In 2003, 5% of large companies offered high deductible insurance plans, but the number increased to 20% in 2009. The average annual deductible for these plans is $1000-2000 for individuals and $2000-4000 per family. Many companies are coupling these policies with health savings accounts (HSA) to help their employees save money for emergencies. A HAS is an account to which the employer and the consumer can each make contributions for tax advantages. In theory, policy holders can place the money they save by paying a lower deductible into their HSA so that they can be prepared for unexpected medical needs. These accounts began in 2003 when legislation was passed to give tax advantages to those who set money aside for potential medical needs. In order to benefit from these tax advantages, the consumer is required to hold an insurance plan of at least a $1000 deductible.

Some companies make an exception to the deductible for preventative actions. Blue Cross Blue Shield provides high deductible policies, but they also cover some nonessential healthcare needs for their consumers. Some things such as well-baby and well-child visits and routine checkups are considered preventative, and the consumer does not have to pay the deductible out-of-pocket. This saves money for the insurance company as well as the consumer because serious health issues can be avoided. Most high deductible policies do not offer these benefits.

Choosing a high deductible and a low monthly premium makes insurance more affordable and accessible to lower-income families. The drawback to such a plan is that funds may not be available for the deductible in the event of an accident or sickness. However, many employees who desire lower premiums are willing to take the risk with a higher deductible in order to lessen their monthly financial burden.

California has more insurance options than the average throughout the country, and its employers continue to offer high deductible policies. The state also has the lowest HMO premiums, but many employees fear the high deductible and avoid doctor's visits. High deductible policies could lead to a decrease of medical checkups and other nonessential healthcare, and consumers could be missing out on medical attention that they need because they do not want to pay the exorbitant price.

With a higher premium and lower deductible, people are more willing to visit the doctor and maintain a more faithful schedule of checkups.

Many are concerned that high deductible policies force the policy holder to pay more than necessary. When someone visits the doctor or has surgery at the hospital with a lower deductible plan, the insurance company is able to negotiate with the hospital or the doctor's office and lower the cost of the visit. Policy holders who pay their own deductible without contribution from the insurance company are at risk of paying a higher rate for health insurance because it is not negotiated.

Individual High Risk Health Insurance