High deductible health insurance (HDHP) have become more attractive to employers over recent years. The theory behind a HDHP involves a person shouldering all expenses until a predetermined deductible amount has been met. For example, if the deductible is $2,000.00, a person will assume all responsibility for the expenses until the $2,000.00 deductible has been met. Whatever expenses that are greater than the $2,000.00 deductible will be covered as a part of the health plan. This deductible is labeled as high, because it is set at a greater amount than standard health plans. The insurer will cover the balance of the medical expenses once the deductible has been met in full for the remainder of the health plan year.
One major advantage of an HDHP is the reduced monthly premiums. Monthly costs come at a more reasonable price and could save you more money overall. The idea is that you will save money for future now in the case there are future medical expenses.
A way to save for a future medical expense is when a HDHP is combined with a Health Savings Account (HSA). This type of savings account is where pre-tax money is put aside and withdrawn for your qualified medical expenses. The unused funds in an HSA can be used as an investment vehicle.
HDHPs are advantageous for young adults. Most young adults only need medical coverage for an unexpected medical expense rather than a chronic medical condition. Therefore, most young adults feel an HDHP will give them acceptable medical coverage while saving for medical expenses overall.
Overall, HDHPs give you greater flexibility and discretion over how you use your money. These health plans typically cost less than a traditional lower deductible health plan, yet they can still offer substantial coverage for a wide range of services.
If you are interested to learning how a HDHP can save your company money, contact our partner, McLaughlin and Smoak at 843-972-5414.