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Ask Dave

Higher Deductible Or Lower Premiums?

Amanda and her husband have a low deductible and high monthly payment on their health insurance that they need to change after their baby is born.

QUESTION: Amanda and her husband have independent health insurance.  They are very healthy, but they have a very low deductible and pay over $500 each month.  They are having a baby in a couple weeks and Amanda wants to know if they should change to a higher deductible and lower their premiums after the baby is born.

After the baby is born you should drop the $500 deductible to at least $1,000 deductible, which will knock about $200 off of your premium each month. 

You’ll also want to check into an HSA.  You can get these through an independent insurance agent.  The HSA is a larger deductible – like $5,000 – but you’re premium is very low and they pay 100% after you meet the deductible.  You’re also allowed to save tax deductible up to your deductible each year, which makes it like a health insurance IRA.  That allows you to put thousands of tax-deductible dollars away for medical emergencies.