How Much Should Your Deductible Be?

One of the more confusing things about health insurance is the deductible. Policies often range from having a deductible that is several hundred dollars to those that are $5,000 or above. Those with a high deductible obviously have lower monthly premiums, but not everyone can get their hands on thousands of dollars when necessary. Your head may spin while you try to decide which type will serve you and your family better. Before you choose your next policy during the approaching open enrollment period, consider some of the benefits of each deductible type. 

High Deductible Plans

This policy type may save you a great deal of money, particularly if you and your family members are generally healthy. If you choose a high deductible, you may have to meet thousands in medical charges before your insurance pays anything. After you've met the deductible, you will still have to pay coinsurance, often around 20% of your bill. Experts warn that these high deductible plans work better when you also have a Health Savings Account. These accounts allow you to save pre-tax dollars that you can use to pay the deductible and coinsurance as well as other health expenses. If you can afford to absorb the deductible in an emergency, then one of these plans could be a good choice for you.

Low Deductible Plans

A few insurance plans actually have no deductible, although they are relatively rare. Many will require that you pay several hundred dollars before your coverage kicks in. These plans cost much more than the high deductible plans, but they offer you more security. If you do not have savings, then you will be better protected by a low deductible plan. Paying several hundred dollars more each month for insurance is a burden, but sometimes that is more manageable than thousands of dollars in medical expenses. If you have a chronic illness such as asthma, then the low deductible plan is definitely the way to go. If you require frequent medical care for any reason, a low deductible plan will work best for you. 

High-deductible plans can save you a lot of money or leave you on the hook for huge medical bills. Before you decide on coverage, consider whether safety or savings is your biggest concern. If you are rarely ill and have an HSA or other savings account, you may gamble on a high-deductible plan. Otherwise, stick with the low or no deductible option.