Open Enrollment for 2020 Health Insurance begins on Friday, and Texans are evaluating their options as a result. When looking at Texas Health Insurance policies it can become easy for the eyes to glaze over as you evaluate the matrix of options. Low deductibles vs High deductibles. One Network vs another. Bronze vs Gold. EPO vs HMO. So goes the days of our lives. One key question that we see Texans consistently ask is around deductibles. It seems everyone seems to think that they have it figured out, but then often struggle to explain their situation. So is it better to have a high or low deductible for your health insurance?
What Is A Deductible?
The deductible portion of your Texas health insurance policy is your agreement to pay a certain amount of money prior to the policy's benefits kicking in to cover your expenses. However, there are some caveats to what pays first. Most health insurance policies today offer a co-payment option for office visits to doctors. The ACA minimum essential components requires that certain services, like mammograms or other wellness checks, be included in the benefits at no extra out of pocket cost to you. Did we mention individual vs family? When enough individuals in the family meet their deductible, the policy can then transition to paying for all of your family's benefits.
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. And for good reason.
With the implementation of the ACA, both individual and family deductible amounts began to soar. This brought with it a newfound comfort level with individual deductibles above $2,000 and family deductibles three times that amount. As a result, many people deem a deductible lower than $2,500 to be considered low and worthy of potentially paying a higher monthly premium to have it.
Which Deductible Should I Choose?
Many of the Texans that we talk to about their family's Individual Health Insurance have come to a conclusion when we help them analyze their budget and healthcare spending. 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.
Remember, in the first observation we realized that our out of pocket expenses would end up being roughly the same with high utilization. But on the highest deductible, we save a substantial amount of money on our monthly budget that we can subsequently put away for those bills that may come. We see this comparison play out over and over again when our clients begin to evaluate their options.
If you have never had a health insurance agent view you policies in this fashion, it may be time to evaluate how you look at those health insurance policies. The agents at Insurance For Texans are independent and work for you, not some big health insurance company. Schedule a time to speak with one of our skilled, analytical agents today.