When Having Only Major Medical Makes Sense
A High Deductible Can Save a Lot of Money if One is Healthy
Aug 19, 2009
More and more Americans are finding it nigh unto impossible to pay for their health care insurance. Those who are fortunate to have employer paid care, are the lucky ones. For the self-employed, the unemployed and the under-employed, paying for healthcare is a tremendous burden and can easily consume more than 25% of a family’s budget. If rent or mortgage consumes 33% of the budget, it’s plain to see that there isn’t much left for other items.
Rather than go without insurance, however, one option to consider is to downgrade one’s policy to one that has a high deductible. These policies often call for the insured to be responsible for up to $5,000/$10,000 of out-of-pocket expenses before the insurance kicks in. This is not as formidable as it sounds; however, changing to a policy of this type requires careful consideration.
High Deductibles are Only for the Healthy
First of all, one should not even consider this type of policy if one has an ongoing health condition, such as diabetes, high blood pressure, or any other debilitating condition. Also, one should give serious thought before switching to a high deductible policy if one has children.
However, regardless of age, if one is very healthy, going with a policy that has a high deductible can save thousands upon thousands of dollars in premiums in a year. Most healthy people do not even begin to accumulate enough medical bills in a year that even come close to matching the amount they pay out in premiums. For example, a typical premium for good health coverage may run as high as $1,000 a month for a couple or family. A premium that has a high deductible may run only $500 a month. That alone is a $6,000 a year savings in premiums alone. Most households could stand an extra $500 a month for essentials.
Another consideration, is obtaining a supplemental policy that will help pick up critical expenses. For example, a cancer policy such as offered by Aflack is available at very little cost.
Drawbacks to a High Deductible Policy
There are drawbacks to high deductibles, however. Obviously, if one gets seriously sick or injured, it’s going to cost some money. On the other hand, how often does that really happen? One needs to examine one’s own medical history to determine if this is a risk worth taking. For most healthy people, it is.
Another drawback to a high deductible policy is that these policies usually do not include prescription, vision, or dental insurance. Again, one must decide how dependent one is on pharmaceuticals. Many prescriptions given during the course of a year are for antibiotics, creams and other fairly inexpensive items.
Preparation for Emergencies and Major Illness/Injury
Ideally, anyone electing a high deductible policy would be well advised to either have the required deductible already set aside, or to set aside money from the premiums one is saving each month. Even saving half of the premium monthly to pay out of pocket costs for doctor visits will result in a large stash of cash in short order.
Remember, injuries from car accidents are covered by car insurance. Work related injuries are covered by Worker's Compensation.
Often times schools offer special, low priced policies for students. This may be an economical way to insure one's children. College students also can obtain health insurance through their college or university.
High Deductibles Not for the Timid
One should not consider a high deductible policy if the worry is going to cause stress about "what-ifs" and imagined catastrophes. These policies are ideal for the healthy, however, who rarely see a doctor anyway. Yes, it is always a gamble that something can happen, but most of the time nothing ever does. One need only look at his/her own health history to determine if this is a risk worth taking or not.
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