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What Are the Benefits of a High Deductible?

High deductibles are good for people who can handle the costs of routine medical visits.
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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 17 November 2014
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There are some savings and tax benefits to high deductible insurance plans, especially for people who do not expect to incur very high expenses, or who can carry the cost of a high deductible in the event of a claim. An insurance agent can provide information about available plans and offer quotes, for people who are interested in obtaining a high deductible insurance plan. As with other insurance, people will need to provide some basic information to get a reliable quote. Health, home, car, and other types of insurance are all available with a high deductible, but most people are interested in learning more about their health insurance options.

Deductibles oblige patients to pay for care up to a certain amount, at which point the insurance company will take over. In a high deductible insurance plan, this amount is very high. Insurance companies charge lower premiums for such accounts, an advantage for people looking for savings on insurance. The obvious drawback is that while patients pay less in premiums, they will have to pay more of the share of medical expenses. This type of insurance plan can be a good choice for someone who can handle the costs of routine medical visits, but would need help in a catastrophe with very high medical expenses.

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Sometimes, a high deductible insurance plan will pay for preventative care before the patient has paid the deductible for the year. This is an incentive to get patients to be proactive about health care. Things like smoking cessation may be covered as well. Patients can ask an insurance agent about services covered from day one of the policy. For example, for someone who only visits the doctor for regular checkups, health care might be free after paying the premium, or could involve very low co-pays, while coverage is provided if the patient is involved in a car accident or similar high-cost medical misadventure.

There are also some tax benefits. Medical expenses are tax deductible, including copays and amounts paid towards the deductible. In addition, people with high deductible insurance plans are usually eligible for health savings accounts. These special financial accounts allow people to save money specifically for health care, with tax benefits like earning interest without needing to pay taxes on it. People can roll their savings over from year to year as well, creating a growing pool of funds for managing health care expenses when they arise.

People considering a high deductible insurance policy can talk with an insurance agent about different available plans and what they cover. It can help to work with a broker, a person who will shop around between multiple insurance companies to find the best policy.

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