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If your current health plan doesn’t provide the coverage you need, you may want to consider getting supplemental health insurance. When shopping for the best rate on a supplemental policy, you’ll need to consider the premium and the deductible. Health insurance premiums are the amounts you pay to maintain your health coverage, and the deductible is the max amount you’ll pay for care before your insurance covers the rest.
Supplemental health insurance plans can vary in cost, but the same general rule applies — the higher the premium, the lower the deductible, and vice versa. In this article, we’ll compare the benefits of paying higher premiums vs. lower premiums to help you in your search for supplemental health insurance.
You can get a few nice benefits in exchange for paying higher premiums:
Frequent care is more affordable
The higher your premiums are, the lower deductible you’ll have to meet when you need care. This often makes higher-premium plans suitable for seniors and those with chronic health issues. They may also work well for someone who has a procedure coming up soon and needs to see their doctor several times to prepare.
You may get a tax deduction if self-employed
Self-employed people generally get to deduct all the supplemental health insurance premiums they pay if they aren’t eligible for insurance through their spouse’s employer (or their own employer, if they also work a job). This makes it a little more affordable for self-employed people to increase their premiums and get a lower deductible.
Lower premiums may cause you to pay more out of pocket if you need care, but these plans also work for certain policyholders:
You don’t need care often
If you don’t have any ongoing health problems, you won’t need to visit a health provider beyond your yearly physical or an emergency. In this case, it could make sense to get a plan with lower premiums, since there’s a lower chance you’ll have to meet a high deductible.
As a result, plans with lower premiums tend to suit younger people well. Many may not face the same health issues that seniors may face, and their incomes may be lower, which can make these plans a better fit for their budgets.
You can open a Health Savings Account (HSA)
If your plan qualifies as a High Deductible Health Plan (HDHP), you may qualify to open a Health Savings Account (HSA). Your HSA contributions are tax deductible up to a certain limit ($3,650 for individuals and $7,300 for families) in 2022. This number adjusts for inflation each year. You can then invest your contributions in stocks and other assets, and growth within the account is tax deferred.
You can also withdraw money tax-free if it’s used for qualifying medical expenses — as defined by the IRS — that your insurance doesn’t cover, such as prescription glasses or a wheelchair.
After age 65, you can use HSA funds on anything without facing the penalty you’d pay for nonqualified expenses before age 65.
Determining your supplemental health insurance budget comes down to estimating your risk. If you’re young and healthy, you may not need healthcare beyond your physical and a potential emergency, like a broken bone. On the other hand, perhaps you’re older or have an ongoing health issue. Paying higher premiums to get a lower deductible could be well worth the savings on frequent care. All that said, you can gain some wiggle room on both by shopping around.
Gathering and comparing several quotes can help you get adequate coverage at the best rate.
The content herein is provided for general informational purposes and is not provided as tax, legal, health or
financial advice for any person or for anyspecific situation. Employers, employees and other individuals should contact their own advisers about their situations. For complete details, including availability andcosts of Aflac insurance, please contact your local Aflac agent.
Aflac insurance coverage is underwritten by Aflac. In New York, coverage underwritten by Aflac New York.
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