Millennials Prefer High Premium Health Plans With Low Deductible

NEW YORK (MainStreet) —Millennials are enthusiasts of health insurance plans which offer a low deductible but a high premium, according to a Bankrate.com report.

Their sentiment mirrors what a large group of consumers prefer when they are choosing health insurance plans, with 36% of Americans who chose that option. More than four in ten Americans (44%) prefer a high deductible health insurance plan with a lower monthly premium, while 9% said they do not like either of those two plans.

“It’s much better to go through the pain of researching and choosing a plan now than it is to figure out how you’re going to pay for an unexpected hospital visit during an emergency,” said Doug Whiteman, Bankrate.com insurance analyst.

Millennials and Americans with household incomes of $30,000 to $49,999 are the most likely to prefer a high premium/low deductible plan, while higher income consumers who make $50,000 and up and those ages 30 to 64 years old are more likely to prefer a low premium/high deductible plan.

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“While a low health insurance premium can be very attractive, you don’t want to make the mistake of focusing too much on your monthly payment,” he said. “Especially for older Americans who may require more doctor visits than their younger counterparts, a low premium/high deductible plan could actually cost more in the long run.”

Despite efforts to improve the health insurance exchanges, many consumers still experience trepidation shopping for their health insurance. In fact, 82% of Americans who recently shopped for health insurance say that it’s just as bad as or even worse than doing their own taxes, while 75% say it’s the same or worse than getting the middle seat on a crowded airplane. Even having a tooth filled is better than health plan shopping for some Americans, with 23% of those who recently shopped for a plan saying it was less enjoyable than facing the dentist’s drill and 45% saying it’s just as bad.

“Shopping for health insurance can be complicated, but it’s one of the most important decisions you can make,” said Whiteman. “If you have the wrong coverage or no health insurance at all, you could be just one illness or injury away from massive medical bills.”

The survey also found that 32% of Americans say they feel “more negative” now than they did a year ago about the Affordable Care Act’s impact on their own health care, more than twice as many as the 15% who feel “more positive.”

Choosing a health insurance plan with the lowest monthly premium is often not the best bet even for Millennials on a budget, said Carrie McLean, director of customer care at eHealth.com, an online health insurance exchange based in Mountain View, Calif.

Although Millennials often go straight to the health plan with the lowest monthly premium, the issue which arises is that those plans tend to come with higher co-payments and deductibles, which can throw a budget off if you are not prepared.

“When they actually need medical care, they may find themselves stuck with more of the bill than they can comfortably afford,” she said. “As a rule, you should never enroll in a plan with a deductible so high that you couldn’t afford it in a serious medical emergency.”

High deductible plans can be advantageous for healthy people who are willing to take a risk financially or are prepared to shell out a large amount of money from their savings.

“With a high deductible plan you’ll be responsible for a bigger share of the bill when you seek medical care, so if you do not often need medical care, a high deductible plan may keep more money in your wallet,” Amy Kleckner, senior marketing director at GoHealth, a Chicago-based online health insurance exchange.

If you get sick or injured unexpectedly, you’ll be on the hook for more of your medical expenses than with a low deductible plan since your coverage will not kick in until you’ve met your high deductible, which can be about $5,000 for an individual, she said.

While most consumers tend to fixate on the monthly premium cost, you could wind up spending more money in the long run. What people need to pay attention to are their out of pocket costs such as the deductible.

While there are limits on out of pocket costs, most people find the amounts very steep. The out-of-pocket limit for 2015 is $6,450 for an individual and $12,900 for a family, according to the IRS. Choosing a lower deductible plan can help prevent you from reaching the out-of-pocket limit, she said.

If you only go to the doctor once or twice a year or do not take regular prescription drugs, consider a bronze or silver plan, said Kleckner. Bronze plans cover 60% of health care costs and have low monthly premiums, but high deductibles. Silver plans generally have a higher monthly premium than bronze plans, but they cover a greater percentage of medical expenses and offer a deductible that can be about 70% lower than a bronze plan.

Silver plans are a good option if you qualify for tax subsidies or cost-sharing reductions because you can essentially pay a silver plan’s premium and receive the lower out of pocket costs of a gold or platinum plan, Kleckner said. Gold and platinum plans are ideal if you frequently visit the doctor and regularly use prescription drugs. They are generally high premium/low deductible plans, so the insurance company will cover more of your medical expenses.

--Written by Ellen Chang for MainStreet

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