Big Health Insurance Deductible? This Can Help!

Financial, Insurance & Legal Documents,

HDHPFor most of us, we’ve seen our health insurance deductibles rise dramatically over the last decade. We now pay thousands of dollars in deductible– and that’s before any of the insurance kicks in!

But there are things that can help. We’ve put together a list of products to help cover those high deductible costs.

First, if you have a qualified high deductible health plan, you should use an HSA (Health Savings Account).  This allows you to put money away (TAX FREE) to pay for your deductibles.  Check with your insurance advisor or accountant to see if this is an option for you.

Here are some additional solutions:

Disability Insurance
  • What is it? Insurance policy that pays you money if you’re sick or injured and cannot work.
  • How does it work? When you buy the plan, you choose the amount of monthly benefit (usually 60% – 70% of your income). You choose how long you want the benefits to pay (2 years, 5 years etc). You choose the elimination period, which is the time before benefits begin. This is usually 60 – 90 days after your illness or injury begins.  The Insurance company pays you every month until you recuperate or reach the end of your plan.
  • How can it help with a deductible?  The plan is designed to replace your income when not working. This provides you with the extra dollars to cover that high deductible. it can also help with living expenses, while not working.
Accident Insurance
  • What is it? Insurance policy that pays you money if you’re injured and unable to work. (We’ve all seen the AFLAC commercials).
  • How does it work? You buy coverage at certain dollar levels, the more you want it to pay, the higher the premium. Once a covered accident occurs, the insurance company pays you a lump sum dollar amount.
  • How can it help with deductible? The product is perfect to help with deductibles, as you are receiving a lump sum of money. Remember though, it is accident only, so this would not pay in the event of a health-related situation.
Critical Illness insurance
  • What is it? An insurance policy that pays you a lump sum of money upon the diagnosis of a major illness. Usually the illness covered are;
    • Heart Attack
    • Cancer
    • Stroke
    • Kidney Failure
    • Major organ Transplant
    • Blindness and Deafness
    • Multiple Sclerosis
    • Coma
  • How does it work?  When you buy the insurance, you decide on the lump sum that will be paid. Amounts usually range from $10,000 to $50,000 for each illness.
  • How can it help with deducible? This product was designed for the added expenses that come with a major illness. It will not only help with deductibles but can be used for other out-of-pocket expenses as well.
Life Insurance with Terminal Illness coverage
  • What is it? Life insurance that includes a feature that pays in advance if you are diagnosed with a terminal condition.
  • How does it work? You choose the life insurance amount, then a percentage of that can be paid in advance. Generally, 50% – 75% can be paid out to use as you choose. Then upon death, your beneficiary receives the balance.
  • How can it help with a deducible? The benefits are generally paid upon diagnosis, to enable you to cover that deducible. As with the other plans, there are no requirements on how you use the money you receive.
So, here is the breakdown of the cost:
  • Best overall: Health Savings Account
  • Most expensive: Disability Insurance
  • Moderately expensive: Life Insurance
  • Relatively inexpensive: Critical Illness
  • Least expensive: Accident Insurance

So, what’s right for you? Maybe cancer or heart issues are in your family history? Then maybe the Critical Illness is right for you. Maybe your children are in sports or are accident prone and you are often running to the urgent care? If so, the accident coverage might be of interest. Maybe you just want the security to know you have another resource in the event something did occur? Then the Life insurance with a terminal illness feature might be your option. Yet, the disability protection pays you money in the event any condition (health related or accident) prevents you from working. So perhaps that’s the best all-around solution for you.

So, as you consider your health insurance options – premiums vs. deductibles, know that there are other pieces that can play into your decision. Many times, employers offer these types of coverage at the workplace. If not, contact an insurance company or insurance professional for help.