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I'm comparing some health insurance plans with Humana, and trying to understand the relationship between the price tiers. For a single HDHP plan, they have these price options:

$1,500 Deductible - you pay $141.07/month (Tot- $3192.84)

$2,500 Deductible - you pay $100.30/month (Tot- $3703.604)

$3,500 Deductible - you pay $80.38/month (Tot- $4464.56)

$5,000 Deductible - you pay $61.48/month (Tot- $5737.76)

$5,950 Deductible - you pay $56.42/month (Tot- $6627.04)

Alright, so annually, the last option is more than double the price of the first, for the same plan.

I understand that everyone's finance situation is different, so some need a lower monthly payment - that makes perfect sense.

The irony is: How could you not afford the higher monthly payment, but you could afford the overall more than double annual cost?!?!

What am I missing?

bstpierre
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3 Answers3

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It's simple. Most people don't spend $6000 a year in medical care. As for myself, there's probably only $400 or less, mostly in annual checkups and the like.

If you are the type to require more medical care, then you will pay more per month. I know a person with asthma, kidney stones, and inflammatory issues. This person spends probably $1000 in co-pays per year, with considerable more if you were to include the hospital visits in the likes. But if you don't think you are one of these people, then don't get the higher cost plan.

PearsonArtPhoto
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Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing. In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year. Most years a person in good health pays little because of the deductible. Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses.

Note - the original question has been edited since.

JoeTaxpayer
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mgkrebbs
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I edited in the total annual out of pocket for each level to help illustrate what's going on. Your question makes sense, of course, but it's less a matter of afford vs an attempt to save. The way these plans work is to allow some choice based on your past experience. I can afford any option, but knowing the number of visits we have had in the past, the lowest cost option has the highest premium. A young couple who hardly sees a doctor may choose the highest deductible, risking the potential $3434 extra they may pay in a bad year for the savings of $1016.

Personally, I'd not be able to guess accurately enough to benefit from the middle choices, and can see the two extremes being picked most often.

JoeTaxpayer
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