The Problem with a Deductible

Except for employer plans, high deductible health insurance feels like a scam to many healthy Americans. They see only 2 options:

  1. Their plan costs a few hundred dollars a month, and has a deductible that’s so high that it won’t pay for their healthcare until they’re bankrupt, or
  2. Their plan costs close to a thousand dollars a month (or more), and has a deductible that is low.

Either way, you probably feel about the same. That you’re paying double, once to the doctors and once to the insurance company, when you should only be paying once. It’s a painful cycle that angers many Americans. And in a way, it is a scam that the insurance industry has pulled on consumers – a way that they can get out of paying and turn your insurance premiums into pure profit. This has led many consumers to want to self-insure – to settle for paying for medical bills entirely out-of-pocket.

Let’s just get this out there: Self-insuring, or just avoiding medical care, is NOT a solution. If you get seriously ill or injured while under-insured, then you’ll be willing to pay just about any amount for healthcare, and the insurance companies will want nothing to do with you.


“How High a Deductible is OK for me?”

As a rule of thumb, you should look at your average bank balance. Most people know about how much cash they like to keep on hand for emergencies. Have a look at yours. And then, don’t ever choose a deductible that’s higher than the money that they would have available if they’d have a sudden serious illness or injury. Because, what’s the point in doing that? Simply trying to pay the deductible would put you in financial debt.

If all the only health insurance that you can afford comes with a deductible that’s too high, then you need to explore other options.


There are ways to get around your Deductible

For those who want to get real value out of their health insurance and get around their deductible, there are other options. They’ve heard of Health Savings Accounts (HSA’s), and similar employer contribution plans. Those who have such plans love them.

There are also fixed indemnity Hospital and Doctor plans. There are good and bad indemnity plans out there, so look out. But good ones will greatly reduce your out-of-pocket spending for doctors visits, lab tests, imaging, and hospitalization.

Indemnity plans don’t coordinate with your high deductible plans – which means you can have both types of plans if you want, and neither limits the benefits of the other.

You don’t have to combine an indemnity plan with a high deductible plan however. Not if it’s a good plan. Look for how much the plan would pay for hospitalization or surgery.

And, in place of a high deductible health insurance plan, consider a critical illness plan that will pay a large lump-sum if you have a heart attack, stroke, cancer, or something similar. There are many such plans available for critical illness, and those vary widely by state. Ask your insurance agent for advice.


How to Tell a Good Indmenity Plan from a Bad

  1. Have a look at the per-day hospital confinement benefit. $3,000 to $4,000 is good. $200-$1,000 is bad. And look to see how many days per year this benefit may be paid.
  2. Make sure that benefits are provided for wellness, out-patient diagnostics, advanced imaging, and ambulance.
  3. Stay away from plans that have an enrollment fee above $35.


Have questions? Call us at the RhoadsLife Insurance Agency today – (484) 509-1784.