High Deductible Health Plans: Why They May Cost You the Healthcare You Need
These plans save money up front, but is it worth it?
You’re young and healthy — or maybe you’re just short on funds — so you got a health insurance policy with low monthly premiums and a high deductible. Then you messed up your knee, or started having symptoms of heart trouble. But you postponed seeing a doctor because of what it would cost you.
That scenario is increasingly common. For the first time in 50 years, 90 percent of Americans have health insurance, but the growing popularity of high-deductible plans is forcing people to skip or skimp on needed health care, according to recent research.
Nearly 30 percent of people with high-deductible health plans ($1,500 or more per person) went without medical care because they couldn’t afford it, according to a May 2015 study from Families USA, a nonpartisan healthcare policy group based in New York City. And 14.2 percent of them bypassed the prescriptions drugs they needed as well.
High-deductible plans may work well in some cases. Some people are able to set aside savings and spend on healthcare until they meet their deductible, says Cheryl Fish-Parcham, MSW, private insurance program director for Families USA. “They do fine in high deductible plans,” she says.
But she notes the plans are bad news for people without sufficient savings. “The cost of care before reaching the deductible really deters them from getting care,” says Fish-Parcham. “They can’t afford it.”
Other consumer advocates agree. “There are very few pros. The reality is that people are stretched buying these plans in the first place. Now they are digging into their pockets for a $6,000 deductible before they are even covered,” said Edward Barrera, healthcare advocate and capitol watchdog director for the nonprofit advocacy group Consumer Watchdog, based in Santa Monica, California and Washington. “Basically, these deductibles are the hidden barriers to gaining access to healthcare.”
And high deductibles are
getting higher. A recent review of plans offered via the HealthCare.gov federal
marketplace found that more than half of the plans offered in many states
have a deductible of $3,000 or more.
Employers are also fueling the trend as they seek to reduce their spending on healthcare by shifting more of the burden to employees. Some 46 percent of all employees (and 63 percent of employees in small firms) have deductibles of $1,000 or more, according to The Henry J. Kaiser Family Foundation 2015 Employer Health Benefits Survey. The average deductible of $1,077 has climbed 255 percent from $303 in 2006.
What to consider before you choose a plan
If you’re leaning toward a
high deductible plan to save on costs, keep these tips in mind.
Look for a plan that waives deductibles for chronic conditions like diabetes . Families USA’s Fish-Parcham says some forward-looking plans are lowering co-payments and waiving deductibles to ensure patients with chronic conditions, such as diabetes, high blood pressure and asthma, don’t neglect their health.
Check your savings account. Unless you have enough money saved to meet your deductible and/or out-of-pocket maximum, avoid a high deductible plan if you can.
Read the fine print. Even though the Affordable Care Act (ACA) has limited the out-of-pocket maximum that a Marketplace plan can charge an individual to $6,850 a year in 2016 ($13,700 for a family plan), some insurance companies have found a way around this by excluding the deductible from the out-of-pocket maximum, according to U.S. News and World Report. That means if your deductible is $5000 and your out-of-pocket maximum is $5500, you would have to pay $10,500 before your health plan covered all your expenses.
Create a health savings account (HSA). If you do have a high deductible health plan and no other health insurance, you may want to create an HSA. You can use your HSA to pay out-of-pocket medical expenses tax-free. The contribution limit is about $3,350 per individual and $6,650 per family. And unlike flexible spending accounts (FSAs), you can keep the money you've saved in an HSA if you retire or change employers, and you can roll over any dollars you haven't spent from one year to the next. (Just don’t spend the money on anything besides health care or you’ll have to pay taxes on it.)
Know that some services are fully covered, even before you pay your deductible . Most plans, for example, must cover preventive services, such as vaccinations and many types of screenings (including mammograms), at no charge to you.
Related: How to Create a Rainy-Day Fund
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