HDHP Benefits

November 4, 2009

A high deductible health plan (HDHP) is an individual insurance policy that carries a high deductible, but carries no co-insurance – meaning that once the deductible is satisfied, all medical costs are covered.

(note, this MAY vary from policy to policy, so it’s recommended you shop around a little)

What is the benefit of this? Well, for one, you can save a ton of money up front. For folks who are self employed, or have to pay their own insurance premiums for another reason, the difference in the monthly cost is significant.

For example, a traditional PPO plan with a $500 deductible would cost me around $300/month, where my HDHP costs me about $50. A dramatic savings, no?

On top of that, you get 100% co-insurance. What does this mean? You know that $300/month PPO plan? That only covers 80% of my medical costs after the deductible (up to a certain amount). This means I might still be on the hook for $500/day if I have to stay in the hospital or have surgery. With the HDHP, the most I will ever have to pay is the deductible – which I can offset by having a tax-deferred HSA!

Now, these plans don’t work for everyone of course – those with medical conditions that require regular care or have a good PPO/HMO plan provided by their employer at a lower cost to them might not need it. But as health care costs continue to rise, you can bet the HDHP will on everyone’s radar for a long time!

Is Required Health Insurance A Tax Increase?

September 21, 2009

President Obama doesn’t seem to think so (of course, it IS his idea).  The question remains – does requiring everyone to carry health insurance – similar to laws regarding auto insurance, constitute what can be considered as a tax increase?

From the CNN Article:

He noted that consumers currently pay higher health insurance premiums due to the costs run up by hospitals and other facilities providing care to uninsured people.

My concern with this approach, however, is that the costs aren’t only driven up by folks without insurance, but they are also driven up by people who take advantage of their health insurance plans. For example, people who go to the emergency room for non-emergency services (bad colds, ankle sprains, etc..).

We are quick to chastise the insurance companies as we debate the causes of our health care crisis – but we also need to make sure we look at ourselves when discussing ways to make the health care system work better.