High Health Insurance Deductible Strategy Used by Some

[MineralMan]

For some people, a high deductible health care policy, like many of the Bronze plans offered with ACA, makes good sense. If you are younger and healthy, and anticipate few medical needs, you may prefer the low premiums for these policies, but deductibles that can be as high as $5000 and high maximum out of pocket amounts present some worrisome issues. Here's what some people have done to buffer their financial risks with these policies, since many do not have that much money available at short notice:

If your credit rating is good to excellent, you can consider applying for a credit card with a credit limit that matches either your deductible or maximum out of pocket figure for the policy. If you do this, the credit card should be put away, and not used for other things. Depending on the card's policies, you may want to charge an item once a month or so that you can simply pay off each month. Credit card issuers are not that fond of cards that are not used. But, this card is for medical use, not for general use. Put it away in a safe place and forget you have it.

If, for some reason, you do incur a major medical expense, you can use the card to cover your deductible or maximum out of pocket costs and pay over time for those expenses. When you're not using the card, your only costs will be for its annual fee, if any. It's solely for unexpected medical expenses, and should be absolutely reserved for that purpose, except for small charges you will pay off each month.

Many people have used this method for years as a hedge against a sudden, unexpected medical expense. They consider the card's annual fees as simply another health insurance cost. This plan is not for everyone, but for some, it is an ideal way to hedge your financial situation against an accident or unexpected health emergency.

It's just a suggestion. Many may feel that it's a stupid way to handle this, but it does work for many people and lets them select a high-deductible, low-premium plan while they are young and healthy. With luck, it won't be needed, but if luck is bad, it keeps you from falling into a deep hole with no way out.

[canoeist52]

1. Putting anything on a credit card is dangerous. High interst rates would bankrupt us.

Maybe we should just take out a loan out on the equity in our homes.... 'cause that worked so well before.

[Schema Thing]

3. not treating serious illness is more dangerous

[MineralMan]

4. Yes, of course. The idea is NOT to use the card.

However, if you need health care, due to something unexpected, you can pay the deductible, etc. One way or another, health care is expensive. For younger, healthy people, odds are they won't need to use the card at all, but when you show up in the emergency room and they want payment for needed treatment, you don't have to deal with suddenly coming up with cash somehow.

If you have to use the card, you then pay for your health care's deductible and maybe even the out of pocket maximum, and have time to repay it. If you're not employed or you can''t pay for anything, you're not going to get the credit card anyhow. This is for young people with a credit rating that will allow them to successfully apply for a credit card with a sufficient credit limit to handle this.

If you have enough equity in a home to borrow against it, you can probably get such a credit card. Bottom line is that you don't risk your house. Bankruptcy will clear credit card debt, if worst comes to worst.

[klook]

2. Reasonable idea that requires discipline.

Obviously, a person who has trouble managing credit would be advised to avoid this strategy. But for people like me (who are religious about paying off their credit card every single month, no matter what), I like the idea.

One way to put some usage on the card would be to charge some small, predictable monthly recurring amount and set up auto-pay for that charge.

[MineralMan]

5. That's a good idea for keeping the card active.

Banks don't like people who pay off cards, but they will still issue them, in the hopes that you'll eventually run up a balance on the card.