When considering health insurance plan alternatives, you may want to take a look at plans that have a higher out-of-pocket than what you may have been used to. Those who do this often find a savings of anywhere from $1,000 to $5,000 a year or more. And, these people typically receive smaller rate increases at their plans’ renewals.

Another way of looking at this is – Will you use this plan often enough to justify paying extra money to have co-payments and a lower deductible? If you purchased a higher deductible insurance plan and your annual premium savings are at least a third as compared to the extra out-of-pocket you’d pay for medical treatment, such a plan makes sense.

• Assuming all of the other benefits are equal you will have $1,000 more out-of-pocket (The difference between a $2,000 Deductible and a $1,000 Deductible is $1,000)


• That person would save $29 per month; or $348 per year, or a little over one-third of the difference in the deductibles


• If it is at least three years before the person has a major claim, then it will have been more cost effective to buy the larger deductible. If the person is catastrophe-free for seven years, then the savings would be more than $1,400 after paying $1,000 more on the deductible.

The bottom line is this: You are better off keeping your money in savings rather than sinking it into paying for a lower deductible in this situation.

In addition, Congress passed a new law that allows anyone with certain kinds of large deductible health insurance plans to open a Health Savings Account. This special savings account allows you to save even more on your taxes when you pay for your medical expenses. The best part is that the tax savings begin from the very first dollar that is paid for medical expenses. Instead of buying a more expensive low-deductible health insurance plan, consider a less expensive plan with a higher deductible, and put the savings into a Health Savings Account.

For more information about Health Savings Accounts, talk to your accountant and an insurance agent who is an expert with these types of health insurance programs.