Health insurance plans are not one-size-fits-all. You should consider your health status, how you budget and what benefits are important to you to determine which health plan type is most effective at meeting your health and financial needs.
What is a deductible?
Understanding precisely what “deductible” means is essential to understanding how a high- or low-deductible plan works.
A deductible is the amount you pay for medical costs before your health insurance begins to make payments to providers for services. This amount varies by plan type and by in-network and out-of-network services.
Unlike car insurance, this amount is not paid in full at one time. You pay it little by little over time with various charges until you reach the full amount.
What is a high-deductible plan?
A high-deductible health plan (HDHP) will have a higher deductible and a lower premium. That means you pay less monthly but must spend more out-of-pocket on allowable charges before health insurance payments begin. It gives you the most control over how your healthcare dollars are spent.
This plan type is typically more cost-effective if you are generally healthy and don’t need to visit the doctor often. Most HDHPs pay for several preventive care visits, but you will pay out-of-pocket for other types of care and prescriptions at the contracted amount set by your insurance and provider.
Most HDHPs also give you access to a special Health Savings Account (HSA), a tax-free way to save money for healthcare expenses. Money in your HSA rolls over from year to year and will follow you, even if you change jobs or health insurance coverage. If your employer contributes to your HSA account, this can be another reason to explore an HDHP.
We encourage HDHP members to put some of the money they save on lower monthly premiums into their HSA account to prepare for unexpected healthcare costs that arise throughout the year.
What is a low-deductible plan?
All other plans with a lower deductible than an HDHP would be classified as a low-deductible health plan. These plans function opposite an HDHP – you will pay more monthly but spend less out-of-pocket to meet your deductible.
These plans might be more efficient for those with more frequent medical needs. Common low-deductible health plan types may include:
- Health Maintenance Organization (HMO) plans: With this plan, you choose a primary care physician (PCP) who coordinates your care using doctors and hospitals that are in your plan’s network. If you need a specialist, such as a cardiologist, a referral from your PCP may be required. Generally, an HMO won’t cover services from an out-of-network provider. An HMO plan will usually have a lower monthly premium and deductible, but include coinsurance and copays.
- Preferred Provider Organization (PPO) plans: This plan allows you to manage your own care, with or without referrals from a PCP. You have a choice in which provider to see, although you’ll save money if you remain in network. A PPO will likely have higher premiums than other types of plans, but lower copays and coinsurance.
- Point of Service (POS) plans: A POS is a combination of HMO and PPO. Like an HMO, you choose a PCP. But like a PPO, you can get medical care from both in- or out-of-network providers. You’ll pay less when you use a doctor or hospital in-network and more if you choose out-of-network. A POS plan may require you to pay a higher premium and have copays, but most have no deductible for in-network services referred by your PCP.
Remember, details of plan types may vary by insurance provider and plan design. For information about your specific plan, review your Summary of Benefits and Coverage (SBC) or call the number on the back of your member ID card.
Supporting you in decisions that matter
Finding the right health plan starts with the right support. At Arkansas Blue Cross and Blue Shield, we understand that every member has a unique set of needs, and finding the best plan to fit those needs can be tough to navigate. Whether it’s understanding coverage, comparing options, or planning for the future, our team is committed to helping each member get the InsideTrack to a plan that fits their needs and priorities. To learn about your options, you can speak with our team by calling 800-392-2583, visiting our member portal or scheduling an appointment at your nearest ArkansasBlue Welcome Center.