High Deductible Health Plans — They’re Here to Stay So Let’s Use Them Well
Although the most recent attempt by the GOP to dismantle the Affordable Care Act officially failed as of September 30th (though stay-tuned, as there’s always more drama to unfold), healthcare — and specifically the A.C.A — will continue to be a hot-button issue in the coming years. Lawmakers are struggling to find common ground on the issue, and we have yet to see bipartisan healthcare reform initiatives in the current term.
With so much up in the air surrounding the future of healthcare, one trend is not going out of style: high deductible health plans. Since we’re sort of stuck with them, we might as well learn to use them well to get the most out of our spending on healthcare.
What is a High Deductible Health Plan, and How Does It Work?
For the IRS to consider a plan “high deductible,” it has to meet specific criteria:
- The yearly deductible is at or above $1,300 for one person or $2,600 for a family
- The total out-of-pocket cost including deductibles, co-insurance, and co-payments can’t exceed an annual amount of $6,500 for one person or $13,100 for a family
People who enroll in an HDHP typically pay a lower monthly premium, so the up-front costs are cheaper than a standard plan. Only people enrolled in an HDHP can use healthcare-related tax benefits or open a Health Savings Account (HSA), a tax-free savings account where the money can be used on out-of-pocket costs. This is a crucial point to remember and one of the key benefits of using (or being forced to use) a HDHP. You can find out all about HSAs by reading This is the Year You Should Sign Up for an HSA.
Only people enrolled in an HDHP can use healthcare-related tax benefits or open a Health Savings Account (HSA)
The Rise of the High Deductible Health Plan
HDHPs are a fairly recent addition to insurance plan options, but enrollment in them has increased dramatically since 2003, when legislation passed to create HSAs. In 2006, only about 3 million of people were enrolled in an HDHP. Ten years later, that number had jumped to over 20 million.
Both employer-based plans and private insurance plans are responsible for the increase. Out of all of the employers who offer insurance to their employees, nearly half offer HDHPs as the only option to their members. Gone are the days of cushy PPOs, where individuals could indiscriminately consume healthcare without regard to costs. Now, much more of the burden of healthcare costs are falling to us, the consumers.
Currently around 27 percent of privately insured people have deductibles between $1,000 and $3,000 dollars, and 11 percent of private plan members have deductibles over $3,000. HDHPs dominate the public markets as well, with almost 90 percent of marketplace participants enrolled in a High Deductible Health Plan. Point is, get used to them because HDHPs aren’t going anywhere.
How Do HDHPs Affect Consumers?
The goal of HDHPs is to offer consumers lower monthly premiums and give them more freedom over their health spending by using a Health Savings Account (HSA). For people who are typically healthy, this can be more cost-effective. Instead of a combined cost of nearly $7,000 to cover an individual, the average cost for a qualified HDHP with an option for an HSA was about $5,800, or nearly 20% less.
From a healthcare cost perspective, HDHPs are supposed to lower medical costs by inspiring plan members to seek less expensive health care options and be more conservative with spending. For example, people are more likely to visit an urgent care or wait to see their own physician rather than go to the emergency room if they have to pay more out-of-pocket. Fewer emergency room visits for insurance companies to pay for lead to lower costs overall.
While those are the goals of High Deductible Health Plans, the reality is a bit darker. Health care costs are rising at an alarming rate. People enrolled in HDHPs often avoid and delay treatment because they can’t afford their deductible. Fortunately, that’s not the end of the story…
How to Avoid Overspending on Health Care with an HDHP
If you are enrolled in an HDHP, it’s not all gloom and doom. Provisions in the Affordable Care Act make sure that certain preventative care is provided at no charge, so make sure you take advantage of that. Those benefits include:
- Screenings including blood pressure, cholesterol, and HIV
- Vaccinations
- Annual well-woman visits
- Well child check-ups at regular intervals
Also, using Orderly Health makes finding lower cost options easy! With our bot Louie, you have a personal concierge to help you navigate the costs, benefits, and treatment options for your care. Rather than delaying care, Louie can help you find the best doctors under your plan at the lowest cost or find treatment options that are best for you, for example by sending the urgent care to you when you request emergency care. Sign up today to try it out for free, and simply start by asking Louie, “What can you do?”
Whatever you do, take care of yourself. We love you!
