Decisions, Decisions: Making Good Financial Choices

Should you choose a high-deductible medical plan or pick a low-deductible plan?

In an attempt to switch more of the healthcare burden to workers, many companies are promoting high-deductible health plans (HDHPs), which offer two advantages over traditional plans: lower premiums and the option of opening a Health Savings Account (HSA). As with a Flexible Spending Account (FSA), you contribute pretax dollars to an HSA and use them to pay medical expenses. But an HSA is better than an FSA in that your employer can contribute to it, it can earn interest, and you can carry over any remaining money from year to year (and job to job). The downside of a high-deductible plan: You'll pay all your medical costs until you meet the yearly deductible, which is at least $2,200 per family.

If your family is very healthy -- you and your kids don't have chronic conditions and you hardly ever see the doctor except for wellness visits -- an HDHP may seem like a tempting option. But with medical insurance, it still makes sense to get the most coverage you can afford, so you should probably pick a low-deductible plan. And if you're planning to get pregnant, the choice is easy. A recent study by Georgetown University and the Kaiser Family Foundation found that a new mom covered by an HDHP would typically have more than double the out-of-pocket expenses than she would with a traditional health plan.

Bottom line: You can't afford to gamble on your family's health, so stick with a low-deductible plan if you have the choice.

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