Added Protection With a High-Deductible Plan

How would an extra insurance plan work with my existing health plan, and when would I want to add more insurance?

September 3, 2020

Unexpected Hospital Stay Can Cost

An unexpected hospital stay will trigger many questions and concerns, and unfortunately for many of us, questions around cost will come to dominate the event. Even with a primary health insurance plan, there can be expenses or costs that simply aren’t covered. A recent study found that two in three adults worry about unexpected medical bills. In this article, we’ll walk you through some of the basics of health insurance plans and steps to reduce your out of pocket costs if you have an unexpected hospital stay.

What is a high deductible health plan?

There are a few different types of major health plans out there, and they vary based on your premium — how much you pay each month, and your deductible — how much you pay when you use your plan. High deductible health plans which offer lower monthly premiums but come with higher deductibles are becoming the norm across many employers in multiple industries. So while monthly costs are lower for consumers, the use of health services carries a higher financial burden. Ultimately, this means that while your monthly cost might be reasonable, a visit to the doctor or a hospital stay could mean significant costs to you.

"Ultimately, this means that while your monthly cost might be reasonable, a visit to the doctor or a hospital stay could mean significant costs to you."

Is a high deductible health plan bad?

Many people think that because the costs of a high deductible health plan are higher than other options that these plans are automatically bad. While it is true that an individual’s out of pocket costs would be higher, there are times when a high deductible health plan is a good choice. For example, if you are healthy and don’t typically use health services, a high deductible plan will actually lower your overall healthcare costs. In this case, the biggest risk comes from having unexpected medical needs, which means you will have to pay more for care.

How to reduce risk if you have a high deductibe health plan?

The biggest risk when you have a high deductible health plan is an unexpected medical need where you have recurring visits to a doctor or an unforeseen hospitalization.

One way to help reduce the risk of your high deductible health plan is to have some savings specifically set aside for unexpected health care costs. When budgeting and saving, consider creating a new category for healthcare. As you budget every month, set aside a portion of your monthly savings to your healthcare bucket. This will help ensure you have cash available in the event of a surprise health issue.

Another way to reduce this risk is to set up a Health Savings Account (HSA). An HSA is a special savings account that allows you to save pre-tax dollars, which can then be used for any of your health-related spending. One of the benefits of the HSA is that any of your unused savings for the year can be rolled over to the next year. Unlike use-it-or-lose accounts, this means that any money you’ve set aside but haven’t used will still be there in the future.

Supplemental Health Insurance

In addition to major medical health insurance, there are supplemental insurance plans you can get to cover specific medical or health needs. Adding on such plans to a high deductible health plan means you can keep your monthly costs low while reducing the risk of paying entirely for bigger medical events. For example, hospital indemnity insurance kicks when you require covered care in the hospital.

Hospital costs are climbing, and events serious enough to require in-patient hospitalization typically come with extra costs not only for medical treatment (such as hospital bills, follow-up visits, prescription medications) but also due to missed work or extended recuperation time. Adding supplemental health insurance helps protect you from unexpected and rising costs while providing the flexibility to use the funds in the way that makes the most sense for your life.

Our approach

At Liferaft, we are focused on building simpler, streamlined products that help address surprise events and the associated financial risks you may face. By paying out cash benefits when you need it, our plans prioritize simplicity and flexibility, letting you determine what costs to cover and how.

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