Last year, The Quarterly Journal of Economics looked at almost 24,000 employees’ choice of health care plan and found that most of them were paying too much for their insurance. Are you?
If you’re pretty healthy and only see the doctor for your yearly physical (and, say, a winter flu every now and then), you might be. That’s because getting health insurance for healthy people requires finding the perfect balance: You don’t want to overpay for coverage you won’t use, but
you also want to avoid underpaying and missing out on the coverage you’ll need. So how do you find that sweet spot?
According to The Motley Fool, a good place to start is forecasting your expected health care needs. Ask yourself a few important questions:
- How often did I go to the doctor last year? What prescriptions did I take?
- Do I tend to need care during certain times of year, like during flu or allergy season?
- Do I think these health care needs will continue next year?
- Do I anticipate any major health expenses next year, like having a baby or major surgery?
Then run the numbers to figure out your expected coverage needs. If you’re comparing different plans, plug those estimates into several health care options to see which plans make the most sense for you. Likely, the perfect solution will come from a mix of several options, including high-deductible health plans, health savings accounts and supplemental insurance. Here’s why.
High-Deductible Health Plans
High-deductible health plans, or HDHPs, make an attractive choice for many healthy people, which is why America’s Health Insurance Plans reports that the vast majority of HDHP enrollees are under the age of 45 (and thus generally healthier). As their name suggests, HDHPs have a higher deductible (the amount you have to reach before nonpreventive coverage kicks in) and lower monthly premiums. So you’ll pay less on a monthly basis, but you’ll have to cough up higher out-of-pocket costs if you ever need something more than a routine checkup or flu shot.
Some people call these policies “catastrophic plans” because they cover unexpected events like car wrecks or broken bones. In those situations, you have to pay for your care until you reach your deductible, which might be a hefty sum, depending on the type of care you need. Still, as The New York Times reported in 2016, many Americans have assumed that lump-sum risk for the sake of lower monthly costs, with families who chose an HDHP saving $1,800 a year on average. And for many of them, the looming threat of a high deductible isn’t so threatening with a health savings account in their back pocket.
Health Savings Accounts
Often, HDHPs qualify policyholders for pretax accounts called health savings accounts (HSAs) to help offset the high deductible. That means you’ll get access to a special account to stow and spend pretax cash — up to $3,450 a year for individuals — for health care costs. According to the IRS, HSA funds cover medicine cabinet supplies like bandages and contact lens solution as well as medical expenses like copays, prescriptions and much more.
And the best part? The money carries over from year to year, so there’s no reason to make a year-end drugstore dash to stock up on things you don’t need.
Supplemental Insurance Plans
To maximize your coverage, consider bringing in a supplemental plan like fixed indemnity insurance to go with your HDHP and HSA. These plans pay fixed cash amounts for specific illnesses or injuries, and you can put that money toward your deductible and other costs. Plus, you get that cash in addition to the existing health coverage from your HDHP, so it’s a great way to fill in the gaps and keep costs down.
Health insurance for healthy people does exist, and with a little work, you’ll be able to be able to make sure that both you and your wallet stay that way.