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High Deductible Health Insurance

The general features of HDHP:

As the name suggests HDHPs contains a higher annual deductible compared to traditional plans. An HDHP for 2006 under the FEHB Program contains a minimum annual deductible of $1,100 for self only coverage and $2,200 for self as well as family coverage. HDHPs under the FEHB program possess annual out-of-pocket limits which is not more than $5,000 in case of self coverage and $10,000 in case of self and family coverage.

As the service delivery under the HDHP program within the purview of FEHB Program might be available with a Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), or Point of Service (POS). The Health Plan finds out the eligibility in case of a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) On the basis of the HDHP one chooses, he might be having the preference of using health care services both within and outside network providers. A substantial amount of money is saved by using the services of in-network providers. Except preventive care, the annual deductible is required to be met prior to paying the benefits under the plan. Preventive care services are normally paid as first dollar coverage following a small deductible or a co-payment.

Benefits of changing over to such a plan and otherwise

In case ones medical expenses are normally limited to preventive care, he should consider taking an HDHP, particularly if he has the capability to make more voluntary contributions to the HSA in order to speed up the accumulation of funds for forthcoming medical expenses. In case the in-network medical costs causes the dangerous threshold, one might also think about taking an HDHP, in case of the nature of those expenses is such that one continues to pay out-of-pocket expenses in the traditional plan even after striking the traditional plans lower catastrophic limits. This can be the case as traditional plans might exclude drugs and other costs from their disastrous limits, however an HDHP cannot. By taking an HDHP, once the disastrous limit is hit, no out of pocket expense is there for covered in-network services. In case one has considerable medical expenses which do not reach disastrous limits, one is almost certain to stay comparatively better off under a traditional plan.

While choosing this type of plan, the deductible portion might well be $500 and higher. Coupled with the high deductible, a lot of catastrophic health plans possess a high lifetime maximum payments or upper limits between $1 million and $3 million. When one reaches that upper limit, the insurance company will not be paying for the extra medical expenses and the policy will become void. In choosing

a high-deductible plan, the policy holder is expected to pay for his medical requirements till the expenses attain the cost of the deductible. For instance, in case one has a $15,000 deductible and surgery costs of $5,000, he has to pay for the surgery. By removing coverage in order to reduce the monthly premiums, one gambles on the quantum of money he will spend in order to take care for oneself. At the time of going through the catastrophic plans, one thing has to be made sure since most of the policies do not have pregnancy coverage. In case one is expecting to be pregnant in future, one has to be sure enough the type of coverages that are available. There are other plans which will not cover maternity care for a complete year following the effective date.

The Profile needed:

The people who purchase catastrophic health insurance tend to fall into two groups. Those are young adults who are in their twenties as also adults between the ages of 50 to 65. Young adults those who are purchasing this coverage are either normally self-employed or their employers do not give them coverage. In case of older adults, they are more concerned regarding financial losses that might arise from heart attacks, cancer and other categories of serious ailments. They seem to be generally healthy, have few or no prescription drugs, and would be paying out-of-pocket for office visits in order to save on their premiums. High-deductible health insurance can be taken as an individual plan as also through an employer under a group plan. Companies having 1,000 or more number of employees normally offer higher deductible plans.

The coverage

One can buy varying degrees of coverage depending on the category of high-deductible plan one chooses. For instance, Blue Cross Shield of Florida has a catastrophic health plan known as Essential in a lot of countries. It contains a deductible of $250 and an out-of-pocket limit of $2,500 following surpassing the deductible. The lifetime maximum is $1 million. Under the plan are covered hospital, surgical and X-ray expenses. Other types of services such as visits to doctors, maternity care, prescription drugs and mental health visits are not included.

Care to be taken while buying High Deductible Health Insurance

Prior to buying catastrophic health plan the following things are to be looked into:

(i) The amount of premium per month, quarter, and year

(ii) The amount of deductible and what one can afford to pay

(iii) How extensive one desires his coverage to be

(iv) If one needs prescription medications

(v) Whether one can afford paying for own doctors office visits.

(vi) Does one has any pre-existing conditions

(vii) How often does one fall sick

(vii) The lifetime annual benefit has also to be ascertained.

Some caveat to be adhered to:

(i) Healthy employees are less costly compared to unhealthy employees

(ii) Putting in money into health care insurance alone is not going to be effective

(iii) High Deductible plans are pointless when the employer is functioning as a reimbursement agent. It is considered as a cost shift to employees and does not give the needed outcome of preventing future recurrences of illness.

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