Advantages of High Deductible Policies
If you are a self-employed entrepreneur looking into health insurance, the policy’s cost—and paying the lowest premiums possible—may be an important issue for you.
Here is a health insurance rule of thumb: The higher your deductible (the amount you have to pay out of pocket each year before the insurance company begins covering your care), the lower your premiums.
As a result, many entrepreneurs purchase high deductible health plans, or HDHPs—also known as “consumer directed health plans”—to keep their monthly premium payments low.
Under the Affordable Care Act, many HDHPs cover preventive services—prenatal care, cancer screenings, children’s dental checkups, etc.—without regard to your deductible.
Whether you’re seeking insurance privately through an agent/broker or via an online exchange, you’ll find that HDHPs are typically among the most affordable in terms of premium payments. (Bear in mind that after you meet your deductible, you may still have to pay a copay and/or co-insurance for covered medical services and prescriptions.)
In addition, many HDHPs can be used in conjunction with a Health Savings Account, or HSA. An HSA lets you pay as much as $6,350 of your medical costs each year out of a special, tax-advantaged savings account. It can be an effective way to have the federal government subsidize some of your medical expenses.