Exploring High-Deductible Health Plans (HDHPs): Are They Right for You?

High-Deductible Health Plans or HDHPs plans serve a unique purpose of benefiting individuals preferring less insurance premium. On the contrary, the plan requires paying high deductibles before the insurance benefits begin. A deductible is an agreed amount to be paid initially for your medications. You become eligible to claim only after paying the deductible. The plan however has its benefits, leading to question whether they are the right choice for you. This blog will help you have a closer look at the pros and cons of HDHPs.

What are High-Deductible Health Plans (HDHPs)?

Health insurance plans with high deductibles differ from traditional health plans, comparatively they have higher deductibles than traditional health plans. A health plan deductible is an amount you pay to avail your insurance service.

• -Contrasting with HDHPs, lower deductibles incur more predictable costs and offer comprehensive coverage provided you pay higher premiums.
• -HDHPs combine out-of-pocket expenses (deductible) with low premiums. To satisfy the claim condition, individuals must pay the deductibles as agreed in the contract.
• -A high upfront deductible reduces the burden from premiums, making low-cost monthly premium plans possible. Deductible health insurance favors wealthy individuals since they have a substantial financial buffer to cover these upfront costs.
• -HDHPs cover most healthcare services with deductibles but allow preventive care without paying the deductible. However, they may vary with the plan.
• -The minimum deductible may vary according to the insurance plan. It can range from ₹ 2,00,000 to ₹ 10,00,000. This could go up for some high-deductible plans.
• -HDHPs motivate individuals to become more health-conscious in a bid to reduce expenses. The plan incentivises preventive care, helping in the early diagnosis of health issues.
• -HDHPs feature per claim and aggregate deductibles, providing comprehensive coverage with flexibility in managing healthcare expenses.

What is Deductible in Health Insurance with Example?

In simple terms, deductible in health insurance is the fee you need to pay out of pocket to avail your insurance coverage or benefits for a given medical event. You can avail of preventive care without paying any deductibles. It's like you are cooperating with your insurer to cover the medical expenses,  Let’s know more about Deductible with an Example Assume your plan has a deductible of ₹ 15,000. You incur a wound while playing cricket. After hospitalisation and treatment, you are given a bill of ₹ 50,000. Now, to avail the benefits of your plan, you have to initially shell out the deductible of ₹ 15,000. After paying the deductible, your insurer will pay the rest of ₹ 35,000.

Benefits of HDHPs

Affordable Monthly Premiums

• If you want to cut down your monthly expenses on healthcare insurance, HDHPs are the best healthcare insurance solution for you. This benefits those with low monthly incomes.
• Young people can take advantage of this plan by incentivising preventive care services. This helps them avoid complicated health issues in the future. HDHP's high deductible health plan may require you to pay more aligned to the services covered.

Medical Expense Awareness

• HDHPs require careful selection of services as they are required to have high upfront or out-of-pocket expenses.
• Individuals require a high sense of informed decision-making skills to select the best service and to manage the healthcare expense

Incentivises Wellness-Centric Behaviour

• As insurers are moving towards a value-based service over volume-based service, there has been an emphasis on preventive care programs and actions.
• The motive is to stop health complications from evolving into serious health conditions in the future. Employers are now partnering with insurers to offer wellness programs under HDHPs.

Cons of HDHP

Higher Deductible or Out of Pocket Expenses

The biggest setback of an HDHP plan is its high upfront cost. Managing or paying a high deductible in the event of serious health issues can create financial stress. This can lead to individuals not availing of healthcare services when they need the most citing the inability to pay the deductible.

Less Coverage

HDHPs come with limited coverage. They will not facilitate comprehensive healthcare coverage, which can become a major setup for people with complex health issues. This in turn puts the burden on the people requiring them to pay high and unexpected out-of-pocket expenses.

Probability of Underinsurance

Studies have reported people with complex health issues or mental illnesses avoiding health care services fearing high deductibles. This can have serious implications and insurers must find ways to compensate in exceptional cases like mental illness.

Is Health Insurance Tax Deductible?

Yes, health insurance premiums can be tax deductible. India mandates tax-deductible under Section 80D of the Income Tax Act. This move is to encourage more people to access healthcare insurance. By giving tax benefits on the amount spent on health care insurance, the individual will more likely invest in health insurance covering them and their family.

Are HDHPs Right for you?

If you have a good physical and mental health profile and occasionally consult a doctor, an HDHP with a lower monthly premium will be right for you. You may change the plan as you age since health complications develop with age. In case you have a chronic condition, and visiting a doctor is a must in the plan year, you can contemplate if your medical budget favours a low premium. Research carefully the HDHP terms to finalise if the coverage suits your needs. Besides saving money from lower premiums, some other constraints and benefits are intrinsic to your health profile and spending power.

Conclusion

A high-deductible health plan offers you the flexibility to calibrate with lower monthly expenses with high upfront out-of-pocket costs. Though low out-of-pocket expenses may seem attractive but render them powerless in certain conditions. You can further select flexible options to suit your needs and budget. If you are looking for well-tailored and budget-friendly low-cost monthly premium plans, Bajaj Allianz is ready to serve the best plans to cover you and your family. Take a bold step in providing a protective cover for you and your family. For more information, visit our official website.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.