Insurance Center

One of the first choices you are expected to make when you sign up for health insurance is how high you want your health insurance deductible to be. The question is how much money you want to pay directly to your health care providers before your health insurance kicks in and takes care of the rest.

The answer is that there is a tradeoff between your annual medical insurance deductible and your monthly health insurance premium. The higher your deductible, the lower your monthly premiums will be. The lower your annual deductible, the higher your monthly premiums will be.

If you are healthy and rarely sees the doctor you could go with the lower monthly premium option. On the other hand, if you visit the doctor frequently, take prescription drugs, or if you are planning for a baby and need maternity coverage, then your medical expenses will be greater.

So if you have a lower monthly premium and a higher deductible, then you need to be ready to shell out the cash to pay your doctors.

Conversely, if you have a higher monthly health insurance premium and a lower deductible, then your medical expenses will be much easier to budget for because they will be more fixed: You pay a higher premium, but it is a fixed monthly cost. And your deductible is much lower, so your variable expenses will be a lot cheaper and thus easier to budget for.