After leaving his corporate job and opening his own business, Chuck was now in the process of securing his first health insurance plan that didn't involve selecting from three options that were a part of his employee benefits. As he began to shift through the available options Chuck began to realize that there were far more coverage options than his mind could comprehend. He was now realizing just how easy that selection process had been.
Now that Chuck was not only responsible for the premium payment but also the type of coverage, annual deductible, and out of pocket maximum his eyes were beginning to glaze over staring at the matrix of options. Chuck, like many Texans, started to become fixated on the size of his health insurance deductible. He knew that other items on his Texas Health Insurance policy were important, but worrying about networks, Bronze vs Gold plans, and EPO and HMO status. But we always tend to end up back at the high-deductible plan vs a low-deductible plan. Texans consistently ask is it better to have a high or low deductible for their health insurance? Chuck was about to find out.
What Is A Deductible?
Before we could help Chuck determine which health insurance deductible he needed, we had to start with defining what one is, what it does on the policy, and why it matters. Our agent spent time explaining the deductible on your Texas health insurance policy is the agreement to pay a certain amount of money prior to the policy's benefits kicking in towards covered health care services. Seems pretty straight forward for most Texas, but there are some gotchas that we always help people like Chuck understand when selecting health care plans.
Most Texas health insurance policies today offer a co-payment option for office visits to doctors. Especially your primary care physician. It's important to realize that copays will not count towards meeting your deductible and will still be required to be paid even if you do meet your deductible or maximum out of pocket for the year. While Chuck understood this, it is something that we always mention with Texans seeking advice.
The other major gotcha that people may not realize when considering what counts towards meeting their deductible has to do with the networks that Chuck didn't want to focus on in our initial conversation. When healthcare services are provided out of network and are not emergency medical services, they will often not count towards your deductible if your plan is an HMO or EPO.
The good news is that Minimum Essential Components for plans sourced through the health insurance marketplace require that certain services, like mammograms or other wellness checks, be included in the benefits at no extra out of pocket cost to you. While these preventive services will not contribute towards your deductible, they do not create out of pocket costs to you.
It is also important to bear in mind that there is both an individual and family deductible when you are purchasing family coverage? When enough individuals in the family meet their deductible, the policy can then transition to paying for all of your entire family's benefits for the rest of the plan year. Chuck was very interested in this aspect since he had younger kids playing sports that could create potential covered services from injuries acquired while playing.
What Defines A Low Deductible?
In decades previous, the definition of what was considered a low deductible is very different from what it is today. Some 25 years ago an individual deductible over $1,000 or $1,500 would have been considered high. When "High Deductible Health Plans" tied to Health Savings Accounts (HSA) came into the marketplace 15 years ago they were met with much resistance. The idea of a $5,000 individual deductible seemed absurd. Never mind paying the cash price for routine services until the deductible was met.
Since the implementation of the health insurance marketplace due to the ACA, both individual and family deductible amounts have soared to levels that were once not even thought of under high-deductible health plans. Medical costs and prescription drugs have contributed to this, but a "high deductible" of $2,500 from years gone by now feels quite low to Chuck. The average deductible amount has risen towards that $5,000 for an individual even though it was unfathomable just a few years ago. But the increased amounts have been the way to keep monthly health insurance premiums lower for many Texans.
Which Deductible Should I Choose?
Chuck is like many of the Texans that we talk to about their family's Individual Health Insurance. We discuss that they have to come to a conclusion when we help them analyze their budget and healthcare spending. And that spending involves more than just the monthly premium payment. Let's use some math while looking at a hypothetical Texas family of four in the coming year.
When we look at this chart, we see a couple of very distinct items.
- While there is a large amount of difference between the lowest deductibles and the highest deductibles, the maximum out of pocket expense that your family could incur in a major health event beyond the premiums is nothing. Literally nothing. So on the chance that you wind up with a major event, the cost to your family's finances will likely be the same.
- The monthly premium difference from the lowest to the highest is SUBSTANTIAL. Saving over $1,100 per month will more than make up for that difference in the deductible. You could save over $13,000 per year by selecting the higher individual and family deductible.
It is important to remember that in the first observation we note that Chuck's out of pocket expenses would end up being roughly the same with high utilization from a major event. When there is a lot of utilization, the out of pocket maximum is far more important than what your deductible choice is for any type of plan. Obviously, if you're cash flow sensitive and have conditions that require a lot of in network services it may be important in finding a way to lower the out of pocket limits.
Chuck began to see that on the highest deductible, he could save a substantial amount of money on his monthly budget that can subsequently be put away for those bills that may or may not come. We see this comparison play out over and over again when our clients begin to evaluate their options. Understanding these out of pocket costs can drastically change what you deem to be an affordable health insurance plan. Chuck began to view healthcare plans completely different than he had in the past. This is the effect of True Texas Health Insurance!
If you have never had a health insurance agent view your policies in this fashion, now is a great time to rethink how you evaluate health insurance policies. The experienced health insurance agents at Insurance For Texans are independent and work for you, not some big health insurance company. As a result, they can help you look at not only your financial risk, but also your health needs for both routine care and major events.
Either call our agents at 469.789.0220 or click the button below to get True Texas Health Insurance for your family today.