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A high-deductible health insurance plan can provide affordable coverage for unexpected major health and medical expenses.
Essentially a form of catastrophic insurance, these plans charge a high annual deductible – from $1,000 to $5,000 and higher – in exchange for lower monthly premiums.
You’ll have to pay out-of-pocket costs for routine doctor’s office visits or trips to the emergency room until you hit your deductible. The insurance covers everything after that.
To help pay these out of pocket costs, it’s both wise and typical to pair your high-deductible plan with an IRS-qualified health savings account. You can make tax-free deposits into this account (even if you take the standard deductions and don’t itemize), up to $3,050 annually for individuals or $6,150 for family coverage. If you’re 55 or older, you can contribute an extra $1,000 a year.
This money is yours to withdraw, tax free, at any time, to pay for medical expenses that aren’t covered by your high-deductible policy.
High-deductible insurance is considered a consumer-driven health plan, giving the patients control over how to spend and invest their money.
