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Choosing the best health care plan

Is a high-deductible health insurance plan right for you? Gerri weighs the pros and cons.

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By Gerri Willis, CNN personal finance editor

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For more information on managing your largest investment, check out Gerri Willis' 'Home Rich,' now in bookstores.

NEW YORK (CNNMoney.com) -- As health care costs rise, more employers will be nudging workers toward high-deductible health plans because they cost less. Here's what you need to know if it's among your open enrollment options.

1. The attraction

To start these plans have bargain basement low monthly premiums. For example, a single person would contribute $438 annually to a high deductible health insurance premium through their employer.

But a single person NOT using a high deductible plan would pay almost double that -- $801 dollars a year according to the Kaiser Family Foundation. So, for young people who don't go to the doctor's office often, this would be an attractive option. And employers love these plans because it shifts more of the health care burden onto you. In fact 75% of employers offer a high-deductible health care plan right now.

2. How it works

As you might guess, high deductible health care plans have a high annual deductible, of $1,000 to as much as $10,000 for family coverage. The higher the deductible, the lower the monthly premium.

Once your deductible is reached, your plan kicks in and covers a percentage of your medical costs. Depending on your plan, that could be 80 to 100%.

High-deductible plans are usually paired with a health savings account. You can put pre-tax dollars into this account (as can your employer) in order to help offset the high deductible. The money isn't taxed when you take it out for qualified medical expenses. Next year a single person can contribute $3,050 and a family, $6,150, according to eHealthinsurance.com.

If you leave your job, you can usually just take this pot of money with you.

3. Weigh the pros and cons

These plans may be most helpful for young people, who do not yet have chronic medical conditions and may not even use health insurance.

You may also want to take advantage of these plans if your employer contributes to the health savings account or if you're self-employed and can benefit from the tax advantages of a health savings account according to eHealthinsurance.com.

On the other hand, if you have a chronic condition, or you take a lot of medications, a high deductible plan won't be your ideal choice. If you are considering a high deductible plan, make sure you look for exclusions of pre-existing conditions in the policy.

-- CNN's Jen Haley contributed to this article.

Talkback: Would you consider a high deductible health care plan? To top of page

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