You might know what a high deductible health plan (HDHP) is, if not, here is an in-depth overview. Here is how an HDHP benefits your health and how to make it work best for you.
High deductible health plans have increased 20% in the last two years and now represent 29% of all employer sponsored health plans. Why are they becoming more and more popular? HDHPs are a great way for employers to decrease costs with ensuring continuing coverage for their employees. They are also a great way for individuals to find affordable plans in state healthcare exchanges. What are the other key benefits driving this growth and how do high deductible health plans benefit you?
High Deductible Health Plan Benefits
- Low Premiums – The best part of high deductible health plans are the lower monthly premiums (when compared to traditional PPO, HMO or high coverage options). This allows you to ensure proper coverage for high healthcare expenses and limits your financial exposure. Limit your short-term financial requirements with high deductible health plan insurance.
Flexibility – If you have ever used an HMO healthcare plan, you know the frustration of having to drive 30 min out of the way to see your primary care physician. While HDHPs still have in and out of network designations, the overall offering likely has more care and provider options than some traditional healthcare plans.
- Health Savings – qualifying HDHPs are the only eligible healthcare plan to be used with health savings account. HSAs are the best option to save for health costs for this year and years to come. Retirement healthcare costs are expected to exceed $250,000 for individuals and $350,000 for couples. This is on top of expected Medicare coverage. In addition to saving health money for retirement, after 65 years of age, you can use your HSA money for non-health related expenses (like anything), with no penalty – you just pay ordinary income taxes. It’s just another interest-bearing account similar to your 401k or IRA. What a wonderful perk.
Healthcare costs are on the rise and high deductible health plans provide a great compromise that limits short-term financial commitments while creating more flexibility. Coupled with an HSA, an HDHP provides long-term health savings.
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Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.