Ask the readers: High-deductible health insurance: yea or nay?

Last week reader David posted a question on Get Rich Slowly's Facebook page, asking what our thoughts are on high-deductible health insurance plans. We turned to Barbara Marquand, staff writer at Insure.com, to answer his question. Here's her answer:

High-deductible health plans (HDHPs) have become more prevalent in the last few years, but whether one is right for you depends on your health care needs and financial situation.

The reason we're seeing so many of these plans boils down to one thing: cost. Generally the higher the deductible, the lower the health insurance premium. As health care costs climb, employers seek ways to save money on benefits, so a growing number are turning to high-deductible plans.

This year 38 percent of people with work-based health insurance are covered by a plan with a deductible of $1,000 or more, compared with 18 percent five years ago, according a 2013 Kaiser Family Foundation study. High-deductible plans are especially popular with smaller employers. Among people with employer-sponsored coverage at companies with fewer than 200 workers, 58 percent are covered by high-deductible plans.

Besides their low premiums, HDHPs are touted for encouraging consumers to shop carefully. Proponents say you're more likely to compare costs and avoid needless medical services if you pay a sizable part of the tab. Employers like the idea of insured workers having some skin in the game.

The plans also can be paired with tax-advantaged health savings accounts, or HSAs, which let you save money for out-of-pocket medical expenses. The accounts offer three tax benefits:

  • They let you set aside pre-tax dollars for health care.
  • The savings earn interest tax free.
  • And as long as you spend the money on medical expenses, you pay no taxes on the withdrawals.

Both you and the employer can contribute to an HSA, and, unlike a flexible spending account, the savings roll over from one year to the next. You get to keep the account, even if you change employers or health plans. You can even use the money for general expenses in retirement. After age 65, you pay regular income taxes and no extra penalty on withdrawals for non-medical expenses.

To qualify for an accompanying HSA in 2014, a plan must have a minimum deductible of $1,250 for an individual and $2,500 for a family. The most you and your employer can contribute to an HSA in 2014 is $3,300 for an individual and $6,550 for a family.

What's Best For You?

Think about your health care needs for the following year and then crunch some numbers to determine whether a high-deductible plan is a good choice.

Consider the annual premium, or the portion of the premium you pay for an employer-sponsored plan, as well as the out-of-pocket costs you're likely to face. If you're healthy and usually see the doctor only once a year, you probably won't use enough health care to reach the deductible. Remember, too, that unless the plan is grandfathered (established before the Affordable Care Act was passed), it must cover preventive care for free, which means you pay no deductible, co-payment or co-insurance for those services.

Run a worst-case scenario, too. How much would you pay for the premium and in out-of-pocket expenses if you wound up in the hospital for a week? Check the plan's cap on total out-of-pocket expenses. Under federal rules, a health insurance plan can't make you pay more than $6,350 as an individual or $12,500 as a family for the deductible, co-payments and coinsurance. Could you afford to pay more than $6,000 for health care in one year, not counting the premium?

Finally, on the plus side, consider the tax benefits of contributing to an HSA and factor in any contributions your employer promises to make.

Generally, a high-deductible health plan may be a good choice if you're healthy, don't plan to use much health care, want to build tax-advantaged savings and can afford the deductible in case you get sick.

A high-deductible plan is a poor option if you have a chronic illness, can't afford the deductible, and the high out-of-pocket costs prompt you to delay needed care.

Do any of you have a high-deductible health plan? How's that working for you?

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El Nerdo
El Nerdo
7 years ago

Short answer: yes. Longer answer: yes but exchanges don’t seem to be offering them for my age bracket, only for 27 year olds (site was broken but I downloaded a confusing PDF), which is very highly aggravating, though it looks like I’ll be able to keep my plan through 2014 and we’ll see after that. Additional rant: it irks me that the public (me included, in the past) has been brainwashed to believe that insurance must cover every little expense or else it’s no good. E.g., my car insurance doesn’t pay for tires, oil changes, repairs, etc– it only covers… Read more »

Mrs. PoP
Mrs. PoP
7 years ago
Reply to  El Nerdo

We’re with El Nerdo. The Mr has one at work and it definitely makes us more cognizant consumers of health care for him. For me, I have a PPO through my work and I know I’ve been over treated because of it. Steps where I would have put the brakes on and slowed the process down to wait and see if I really needed something before continuing bored ahead full speed because it was just a few copays to me… instead it was actually thousands billed to my insurer. Not efficient at all. I got treatment that I didn’t need.… Read more »

Linda
Linda
7 years ago
Reply to  Mrs. PoP

I don’t understand this comment. If you didn’t want the extra care why didn’t you decline it?

Money Saving
Money Saving
7 years ago
Reply to  El Nerdo

Great point! I’ve never really thought about it like that. But, when you draw the analogy it makes perfect sense.

We’ll probably be moving to a high deductible health insurance option for 2014 – it’s a little scary, but I think we’ll come out ahead in the long run!

Holly@ClubThrifty
7 years ago
Reply to  El Nerdo

Something to add:

If you’re considering a high deductible plan starting in 2014, make sure that it is eligible for a health savings account!

In the state where I live (Indiana), many of the plans on the exchange aren’t eligible for an HSA even though they had deductibles of 5K, 8K, 10K, and 12K.

Holly@ClubThrifty
7 years ago

Sorry…this comment was supposed to go at the end. It ended up here for some reason =/

Ross Williams
Ross Williams
7 years ago
Reply to  El Nerdo

“my car insurance doesn’t pay for tires, oil changes, repairs, etc— it only covers major accidents.” This is a lousy analogy. Your car insurance only pays for accident damage, it doesn’t pay for mechanical repairs. You are stuck with the bill if you have to rebuild your engine whether it just wears out or because you don’t change the oil. Health insurance used to only pay the big bills. But it quickly became apparent to the insurance companies that they were better off encouraging people to get care before it required costly treatments. Our current system is a direct result… Read more »

Daniel
Daniel
7 years ago
Reply to  Ross Williams

“Trade offs” like having to wait longer for service, having bureaucrats decide what services you can have, and having to send patients to the US when your non-innovating system can’t treat them. If you want healthcare run like your local DMV, healthcare as a public service makes total sense.

Bret
Bret
7 years ago
Reply to  Daniel

With current insurance companies, this is already what we have today. To go to a “good” doctor, we already have to wait weeks for appointments and when we arrive, sometimes hours to see him/her. Insurance companies decide today what services will be covered, and many require pre-approval. I’ve had many recommended tests and services denied coverage by my insurance company, and without insurance they are not affordable. Even prescription drugs are denied regularly, pending a review of medical necessity with insurance-company-paid doctors. Doctors can make recommendations, but in the end it’s the insurance company that determines your care.

Beth
Beth
7 years ago
Reply to  Daniel

I think if you lived outside of the U.S. you’d probably be more aware of treatments and innovations happening all around the world. I don’t mean that to sound snarky — I just don’t think these stories are being told in the U.S. People are more likely to hear what the this or that celebrity is doing than hear about medical research occurring beyond the U.S. border.

And I’m not sure why Americans think bureaucrats sit around and decide what services we can or can’t have? Again, I’m not being sarcastic — I’m curious. Can you give me an example?

Riki
Riki
7 years ago
Reply to  Daniel

I’m not sure who you’ve been listening to, Daniel, but that has not been my experience with the Canadian system at all. I have been treated this year for a serious lung condition and have many appointments per month. Wait time for CT? None. And I’ve had 3. Wait time for X-Ray? None. I’ve had 5. To see my GP? I can generally get an appointment within 48 hours. Usually faster. To see my specialist? Within a week. Exceptional care in ER and hospital units. More tests than I care to think about and two doctors monitoring my results. My… Read more »

Beth
Beth
7 years ago
Reply to  Daniel

@Riki To some extent, the government does decide what is and isn’t covered – I remember when Ontario “de-listed” eye exams, for example. I don’t see how that’s a whole lot different than an insurance company deciding what is or isn’t covered. (Except that we get to elect the people making the decisions?) I do think the quality of Canadian healthcare depends on where you live. In some places, it’s harder to get in to see a specialist or wait times are longer for surgery. It drives me crazy when some people look at the “horror stories” from one place… Read more »

Beth
Beth
7 years ago
Reply to  Ross Williams

Yes, we DO buy health insurance. Our taxes pay for some it, but the rest is covered out of pocket — through employer benefits packages or private insurance packages. My government doesn’t pay for my drugs, or an ambulance ride, or some tests and treatments, for example. Since I’m not covered at work, I made the decision to buy a supplementary package.

El Nerdo
El Nerdo
7 years ago
Reply to  Ross Williams

@ Ross#24 the analogy is fine, it’s your refutation that’s lousy. First, let’s start with the fact that there is car insurance repair. Please look it up. It’s usually sold as “extended warranty.” I know people who have it, and I think it’s silly, but they don’t. You can have insurance pay to rebuild your transmission instead of having some money set aside for car repairs (my preference). Stick me with the engine rebuild, PLEASE. Insurance is a tool to help people cope with situations they can’t handle, not a paternalistic entity to tell us what to do at every… Read more »

Ross Williams
Ross Williams
7 years ago
Reply to  El Nerdo

1) An extended warranty is not insurance, which was your analogy. 2) “I prefer to keep insurance to handle *only the things I can’t manage on my own” You are essentially self-insuring yourself. Which is fine as long as you can actually pay the costs, but when you can’t the rest of us become your backup insurance and pick up the tab. The whole idea of insurance is that you are part of a group that spreads the risk. So what YOU want or what YOU think you can manage is not the deciding factor. The question is what assurances… Read more »

El Nerdo
El Nerdo
7 years ago
Reply to  El Nerdo

Hi again ross I can’t stay for a long reply due to the imminent start of the weekend’s festivities after a long workweek but please see:

http://www.insurance.com/auto-insurance/auto-insurance-basics/mechanical-breakdown-insurance.html

http://www.autos.com/auto-repair/how-to-purchase-auto-repair-insurance

http://www.used-car-advisor.com/car-repair-insurance.htm

thanks & good night

Jane
Jane
7 years ago

“A high-deductible plan is a poor option if you have a chronic illness.” Is this always really the case? I think it probably depends on the amount of the deductible. If you look at pure mathematics, my husband’s high deductible plan is always the better option if you have the cash upfront to pay it. I’m currently pregnant and will give birth in 2014. This guarantees at least a $5,000 hospital bill in addition to various other expenses. Even factoring this in, it made sense for us to stick with the high deductible family plan. Why? Because the difference in… Read more »

Jim
Jim
7 years ago
Reply to  Jane

Totally agree with Jane – I’ve had three different HDHP w/ HSA plans since 2008. Each one economically beat the co-pay plans I was offered, and the benefits were effectively equal. People thought I was nuts to be an early HDHP adopter until I showed them that the numbers don’t lie. And it doesn’t require emergency savings – only that you strategically use the HSA to cover the deductible within the plan year of the deductible. The long term view looking at total employee cost is the key. The assumption here is a basic one – divide your annual deductible,… Read more »

Marsha
Marsha
7 years ago
Reply to  Jane

We had a HDHP/HSA for two years, maxed out the deductible both years, and still came out about $1500 ahead of what we would have paid on the low-deductible plan. You absolutely have to run the numbers for your situation. Last year, my husband’s employer raised the premiums on the HDHP so it’s no longer cost-effective for us. I wonder if other employees were doing what we were and the company caught on that we were gaming the system. Sigh..that $1500 was nice… One drawback of the HDHP/HSA was that there was a lot more paperwork, since you’re paying things… Read more »

Debbie
Debbie
7 years ago
Reply to  Jane

Another “agree with Jane” here – We are a family of six with two of our kids with chronic health conditions that are pricy. In an average year, we’ll hit the deductible by June. Our record in meeting it was by mid-month Feb (also amazing in the fact that the billing came through quickly enough to determine this!) Each year, I run the numbers for each of the insurance options, taking into consideration the for sure prescription, dr visits and procedure costs, premiums, employer incentives, and deductibles to figure out what is the best deal. The last several years, we… Read more »

Laurina Elless
Laurina Elless
6 years ago
Reply to  Jane

I have a high deductible of $2000 a year and I can’t afford it. I will have to go to the doctor several times before I see any coverage. What can I do? I have copd and I have to go to the dr to get inhalers and other meds. Can someone help me understand my options please? I’m really confused. I’m at about 35k per year if that needs to be figured in the equation.

Alex
Alex
7 years ago

I’m 28, active, and healthy and I have a HDHP. Before making the decision to go with that plan I had to make sure I had the cash available to deal with a worst case scenario (an out-of-network, max out-of-pocket situation). In 2 years of having the HDHP I’ve saved about $1900 in premiums over the next cheapest plan. I can’t see myself continuing my enrollment in the HDHP through my 30s, but currently it’s right for me.

Ross Williams
Ross Williams
7 years ago

“Of course, this whole discussion hinges on having a sizable emergency fund.” I think this pretty much sums it up. If you can self-insure yourself for the first $5000, then a high deductible plan may make sense. Especially if you stay under the deductible. But if you are going to carefully crunch the numbers, you need to consider the opportunity costs from having $5000 in highly liquid, and low interest, cash accounts. For employers who have a large enough work force, high deductible policies combined with an HSA to cover a portion of the deductible can provide their employees with… Read more »

Nick
Nick
7 years ago
Carol
Carol
7 years ago
Reply to  Nick

If your employer chooses to offer the option…

Ramblin' Ma'am
Ramblin' Ma'am
7 years ago

My company has a traditional plan and a high-deductible plan. I tried out the high-deductible plan, but am switching back next year. I just don’t have the right temperament for it. Yes, my emergency fund could cover the deductible and coinsurance costs. But that would represent a pretty sizable chunk of my emergency fund. I decided to switch back to the higher-premium plan (which is still pretty cheap; I’m lucky to have inexpensive employer-provided insurance). Not only is the deductible lower, but a lot of things, like doctor’s visits, are only subject to a copay.

tas
tas
7 years ago

I used to be skeptical of high-deductible plans until my husband & I researched getting one. But we are relatively healthy and rolled over an IRA to fund our HSA (which is a great deal IF you needed to roll a pre-tax IRA to a Roth anyway — we’re saving $1200 in taxes by rolling it to an HSA which means that the first $1200 of medical expenses is basically free. And with luck, we won’t use the full $1200 and so will come out ahead in the long run.) which means that we’ll pay far less for healthcare than… Read more »

CCH
CCH
7 years ago
Reply to  tas

I didnt realize that you could fund an HSA with an IRA. Does that work in reverse as well? When my wife switched jobs, her new employer did not offer an HDHP plan with an HSA, so the money previously saved in our HSA is still sitting there, and since we are no longer covered by an HDHP, the institution holding our old HSA funds has now started charging a monthly fee and I cant seem to find a place that I can put the money that doesn’t charge a fee. Yes we can still use the funds to pay… Read more »

Kiernan
Kiernan
7 years ago

I’m trying to decide this now. I’ve been with my employer a number of years and have always selected the traditional plan. I’m intrigued by the tax advantages of an HSA but concerned about the high deductible ($5K vs. $1500 for the traditional plan) and the out of pocket maximum ($12,700 vs. $7,000). Payroll deductions are $1300 less per year for the high-deductible plan, and my employer will kick $1200 into the HSA. If I add $200 per pay period into the HSA, that’s a tax savings of almost $1500 and cancels out the deductible (though not the annual max).… Read more »

Wendy
Wendy
7 years ago

I absolutely love HSAs and think that being eligible for one is a decided advantage.

They are better than IRAs because you get a deduction when you contribute, the funds grow tax free and are distributed tax free in retirement, but are also available for distributions before retirement age if you need to access the funds because of medical misfortune.

I am inclined to fully fund the HSA and then pay actual medical out of pocket in after tax dollars if my cash flow can handle it just because I think of the HSA as retirement savings.

Austin
Austin
7 years ago
Reply to  Wendy

I’m also a big fan of HSAs for their retirement-funding potential. One point of clarification however. HSAs, in a retirement savings sense, are almost identical to traditional IRAs. Money is contributed tax-free today, grows tax-free until retirement, and then any distributions for non-qualified medical expenses after age 65 are treated and taxed just like income. That is to say, you will be taxed, but not penalized, for non-medical withdrawals after age 65. Withdrawals earlier than age 65 are subject to an additional 20% tax.

Source: http://www.irs.gov/pub/irs-pdf/i8889.pdf

CCH
CCH
7 years ago
Reply to  Wendy

The funds are not distributed tax free in retirement unless you use them for qualified medical expenses. Distributions for reasons other than qualified medical expenses are treated the same as traditional IRAs. Also, depending on your HSA provider, the fees associated with investing through the HSA are typically higher than those associated with an IRA through a discount online broker like Scottrade or Fidelity.

Done by Forty
Done by Forty
7 years ago

I’m a huge backer of HDHPs, not only because insurance typically has a negative ROI for most people, but also because it properly incentivizes healthy behavior and discourages wasteful healthcare costs.

PawPrint
PawPrint
7 years ago

Never had a high deductible and because of chronic illness requiring costly quarterly treatments plus costly medications, we never will. I was thankful that we had the gold standard plan when my husband broke his hip, and got two different cancers in one year. Luckily, we pay less than $250 a month for work-sponsored insurance for both of us, although that will change next September. We use up the maximum flexible spending amount every year. I wasn’t happy when the cap was reduced to $2,500. And, because I read so much on PF blogs about people touting lifestyle choices as… Read more »

SLCCOM
SLCCOM
7 years ago
Reply to  PawPrint

The amount of magical thinking that eating right and exercising will somehow keep you healthy and from getting injured is frightening.

What is so scary about it is that the people who indulge in it condemn the people who do get sick as being somehow responsible for it.

Carla
Carla
7 years ago
Reply to  SLCCOM

@SLCCOm – I’ve met a few in my life.

When when I respond to their condescending statements about what I should do for my health, they usually back away when I tell them what my diet and exercise routine is like.

Diet and exercise did not prevent MS or chronic Lyme (though it does help with PCOS). With that said, I’m better off than a lot of my peers with the similar health issues because of my lifestyle.

Hopefully I won’t get into an accident.

Beth
Beth
7 years ago
Reply to  SLCCOM

YES! Some of us didn’t win the genetic lottery. Simple as that.

Profitable industries have evolved around supplements, superfoods, diet plans, and exercise fads that all supposedly prevent illness. There’s far more marketing speak that science though.

I do think it’s good that more people are trying to live a healthy lifestyle. I just think we have to be realistic and stop blaming people for things beyond their control.

k-ro
k-ro
7 years ago

Maybe I’m contrary* but I find I’m incentivized to consume MORE on our HDHP. I’m so peeved about the company pushing more and more costs to us and providing poorer and poorer quality coverage (while awarding the executives big bonuses for all the “money saved”) that I find myself highly motivated to ‘get my money’s worth’ out of the situation. If we’ve met our deductible, for example, I encourage my family members to seek care for things they might have previously put off so that the insurance covers more. Let’s just say this is my way to make sure the… Read more »

Jane
Jane
7 years ago
Reply to  k-ro

This is absolutely true, but only in years that you have reached your deductible. Next year after we reach the deductible, we are all going to the dermatologist and checking if we need any moles removed. Last time I was pregnant and had reached the family deductible, I did the same thing and eventually ended up going to an expensive plastic surgeon. I figured, why not? Skin/mole maintenance is very important. I lost a family member to melanoma in her thirties. Such visits are not frivolous.

Carla
Carla
7 years ago

My Part B has a high deductible and I learned a few years ago that its par for the course. Being fairly young and living with chronic illness will keep you from getting rich slowly and this is just one reasons. Regardless of my options, I end up paying either way.

Miss Growing Green
Miss Growing Green
7 years ago

Short answer: No.

My husband’s employer offers amazing health insurance- low deductible, full health, dental and vision, for only $40 a month for the two of us.

If he gets tired of working, then we will definitely go with a HDHP, though. We rarely utilize our benefits as it is. Even though *we* only pay $40 a month, his employer pays $800 a month for those benefits. I wish there was some way we could waive their health plan and get $800/month more on his paycheck 🙂

PW
PW
7 years ago

Many of these High Deductible Plans including the HSA are set up allowing the EMPLOYER to contribute to part of the deductible, via an HRA (Health Reimbursement Account) or an HSA (Health Savings Account). I won’t expand on the differences at this time, but the employer will often pay the first $2,500 of an employee $5,000 deductible. The reason is that the employer saves so much in premium, they “give back” some of the savings to the employee.

Daniel
Daniel
7 years ago

Yes – they _were_ worth it, until ACA ruined them. I’ve been on an HDHP + HSA for probably 7-8 years now and loved being able to save on my own. Once I’d saved up enough to cover the deductible in worst-case-scenarios, it was definitely a no brainer. Keep paying less, saving, and getting a tax break, or pay more and not get to keep the money after? Unfortunately, I got “the letter” the other day and am told my grandfathered plan will be shut down Dec 2014. If I don’t call in, it will be converted to a “ACA… Read more »

Cindy
Cindy
7 years ago
Reply to  Daniel

“If I don’t call in, it will be converted to a “ACA compliant” plan at twice the premium Dec 2013.” Are you worried you won’t have time to call in before the end of December? You only lose the plan for 2014 if you do nothing. And your plan is closing in 2014 because the Insurance company has deemed they do not want to become compliant with a law and offer a plan with the minimum coverages the law has deemed appropriate. The reason they don’t want to do this is money – they prefer to close rather than make… Read more »

JAM
JAM
7 years ago
Reply to  Cindy

Cindy,

Many may benefit from ACA, but it’s just as true that many will also have to “pay the price” for the benefits others receive. It’s unreasonable to expect them to be pleased about it. It seems that most people judge the ACA based on whether they “win” or “lose.”

Andrew
Andrew
7 years ago

” Employers like the idea of insured workers having some skin in the game.”

Must we used tired sports analogies for everything? Your health, and by extension your life, is not a game.

Mini-rant over.

SLCCOM
SLCCOM
7 years ago
Reply to  Andrew

Nor does magical thinking work. When you have “skin in the game” you skip going to get medical help when you should. Once it gets worse and more expensive to treat, you have no choice.

Penny wise and pound foolish thinking!

pokeable
pokeable
7 years ago
Reply to  SLCCOM

Please cite the scientific, peer-reviewed population study that supports your belief that preventative care results in financial cost savings.

While it makes intuitive sense, what you said, integrated preventative programs have been found to INCREASE utilization and health costs.

http://www.reuters.com/article/2013/01/29/us-preventive-economics-idUSBRE90S05M20130129

Michael
Michael
7 years ago

I have an HDHP and absolutely love it. My wife and I have had it for a full year now and we are planning on using it for a baby due next June. We just received our open enrollment package and most of the plans are going up significantly, 76% for a PPO 500… Ouch!

VT Moose
VT Moose
7 years ago

I’m going the HDHP/HSA route this year, but I don’t have an HSA through my employer. Does anyone have any recommendations?

I’m currently looking at http://www.hsaadministrators.info/ but I was wondering if anyone had any reviews or positive experiences elsewhere. I’m definitely focused on the investment part of the HSA!

Debbie
Debbie
7 years ago
Reply to  VT Moose

Many banks and credit unions have HSA accounts. Ours has a debit card that we use for medical and dental expenses.

CCH
CCH
7 years ago
Reply to  VT Moose

TD Bank supposedly offers an HSA with no monthly fee, but they do charge an account setup fee.

John
John
7 years ago
Reply to  VT Moose

I’ve used hsaadministrators for a number of years. Reasonable fees. And I invest is super low cost Vanguard mutual funds. I’d recommend them.

Josh
Josh
7 years ago
Reply to  VT Moose

I’ve had an HSA account for almost 3 years now. I max out the contributions every year to get the tax benefit. I keep about $500 in the HSA account for medical expenses and the rest goes into the investment part.I had two options TD or Deviner. The TD account would operate like a normal brokerage account, meaning i’d have to pay for each trade (not convenient if i have a large medical expense and need to transfer money from the investment account to the HSA account) . The Deviner is mutual funds only but only charges a small annual… Read more »

Chuckie G.
Chuckie G.
7 years ago

“Proponents say you’re more likely to compare costs and avoid needless medical services if you pay a sizable part of the tab.” Anyone ever tried to do this? I have… and the results? ::epic eye roll:: My wife is pregnant and we asked how much this is gonna cost. We nearly got laughed out of the hospital. When it was clear that we didn’t see the humor, we were placated with the response “oh every situation is different” we couldn’t possibly tell you. Healthcare providers need to better inform patients instead of pulling out all of the stops on the… Read more »

Daniel
Daniel
7 years ago
Reply to  Chuckie G.

We’ve done two kids through our HDHP/HSA without maternity coverage. Cost was ~$6000 per child for everything (pre-natal and delivery and hospital), which we saved up and paid out of pocket. We submitted things through insurance anyway to get their discount, and the hospital gave us a discount as well for paying cash. Had we added a maternity rider, we would have paid about the same in premiums, maybe a bit more, and _still_ had the deductible to contend with. We did experience what you describe, and to this day don’t understand why we can’t get a straight answer to… Read more »

K-ro
K-ro
7 years ago
Reply to  Chuckie G.

You are absolutely correct. This is one of the most ridiculous aspects of HDHPs — comparison shopping requires transparent pricing, which is nonexistent in healthcare.

And who is responsible for the lack of transparent prices…? The same entity selling what a great idea HDHPs are to employers and individual consumers — insurance companies.

Tim
Tim
7 years ago
Reply to  K-ro

K-Ro – why do you blame insurance companies for the opacity of health care pricing? It seems to me the blame falls squarely on doctors and hospitals. As an analogy, when I take my car to the mechanic, the mechanic has to tell me ahead of time how much a repair is going to cost. It would be absurd to think it’s anyone else’s responsibility

Jane
Jane
7 years ago
Reply to  Tim

Tim – Mechanics would behave in exactly the same way if they had to deal with the ins and outs of our health insurance system on a daily basis. Hospitals have set rates. But then there are the negotiated rates with insurance companies and the amount that the insurance will actually pay based on your plan. This is why hospital administrators are often unable to tell you what you will actually end up paying. It’s a total crap shoot most of the time, and they know it. You don’t think the person you talk to on the phone at the… Read more »

Tim
Tim
7 years ago
Reply to  Tim

Jane – I was responding to Chuckie’s comment, where Chuckie couldn’t get the hospital to name a price. If that’s true, then the blame is entirely on the hospital. If the question is simply how much will the insurance reimburse, then that’s a question for insurance. I don’t expect my mechanic to know how much my insurance will reimburse me. But they are responsible for setting a price.

Jen from Boston
Jen from Boston
7 years ago
Reply to  K-ro

As I mentioned in my comment down below it’s hard to really get a fix on out-of-pocket costs when you don’t know what the true pricing is. In my cas I have a soon-to-be out-of-network provider. I know what she charges, but I don’t know how my my PPO insurer is going to pay her, nor do I know what the HDHCP insurer will pay her. I use the health care cost simulator put together by my compnay’s benefits administrator it looks like the HDHCP is my best bet, BUT THE SIMULATOR DOESN’T TAKE INTO ACCOUNT BALANCE BILLING. Oh, and… Read more »

Michael
Michael
7 years ago

I agree. I have asked multiple times and received the same answer. I did ask around to some of my co-workers who recently had babies to get an idea of prices.

I live in Alaska and we do not have a lot of competition for hospitals. I expect to pay well over 10k for a baby. My maximum out of pocket is 9k. We will have over 10k by the time the baby lands so we will be covered with the money in our HSA.

SLCCOM
SLCCOM
7 years ago
Reply to  Michael

Congratulations on the baby anyhow!

Stace
Stace
7 years ago

I love mine, but mostly because my plan has the minimum deductible to qualify as a HDHP ($1300), they kick in 1000 into my HSA, and premiums are $20 a month (and used to be free).

I very rarely go to the doctor or, so I’m enjoying the “free money” that can roll over, be used as medical expenses come up in the future, or for retirement.

Open enrollment notices should be going out soon, and I’m a little nervous to see how things will change for next year.

Debra
Debra
7 years ago

Having a high deductible health insurance policy ($10,000) brought us major medical bills this year when the doctor was covered but not the place where an outpatient operation was performed and where scans were covered but not the one doctor who read them. We ended up with about $30,000 out of network charges and only $2,000 of our medical charges was covered by the deductible. If it looks like a bargain be suspicious. We still have $8,000 remaining on our deductible this year. In other words, with a high deductible you pay all the bills and go broke quickly. I’m… Read more »

Jane
Jane
7 years ago
Reply to  Debra

I’m sorry you had so much trouble, but your comment is misleading. It is not the fact that your plan is high-deductible. It is likely because your employer provides crappy insurance. You might have had these same issues if you had another plan with your employer. May I ask what type of employer this is? Large corporation? Small business? Most people I’ve heard that have had these nightmare, crappy coverage scenarios have either been students, worked for small companies, been self-employed, or bought cheap insurance on the open market. I’m genuinely curious here and not trying to bust your chops.… Read more »

Ross Williams
Ross Williams
7 years ago
Reply to  Jane

The problem is not that it is high deductible. But there are a lot of crappy insurance plans out there that pitch themselves as inexpensive because of the high deductible. In fact, they don’t cover a lot of things and sometimes have very low maximum limits on benefits as well. Employers and individuals both think they are getting a good deal until someone has major medical costs. People need to be very careful in choosing their plan. You can put your HSA money in Vanguard funds, but you will have to go through a third party and pay hefty fees.… Read more »

Jen from Boston
Jen from Boston
7 years ago
Reply to  Jane

It sounds like her plan’s network is small. Also, how much control does a patient really have over who reads the test and X-rays results?

Debbie M
Debbie M
7 years ago

I got high-deductable insurance when I left my full-time job. I have enough money saved that I only want insurance for the super-pricy things so I don’t risk bankruptcy, so I like it. Even if you never reach the deductable, you get insurance-negotiated prices, which I love since I hate negotiating. And ACA means you get some things free. And I love HSAs, even though I don’t have an employer to make contributions. Like others, I’ve been paying out of my own pocket to let that money expand tax-free. But if you keep track of your receipts, you can change… Read more »

David
David
7 years ago

Thanks for taking the time to answer my question. I wasn’t expecting a whole article dedicated to my question.

I ended up getting a $5,000 deductible. I’m not sure what the exchange would have offered. I did it through my current insurance company. I was one of the people who recieved a letter that said I could not keep my current plan.

Being healthy is like being a good driver. It really doesn’t matter when you have an accident. Wish me luck… 🙂

Jonathan
Jonathan
7 years ago

I’ve had an HDHP and HSA for the past 7 years and have always liked it insomuch as I haven’t had to pay anything ever. My employer has always paid 100% of the premium and contributed $100/month to my HSA. I’ve only been to the doctor twice in that time, so I haven’t paid a dime in out-of-pocket costs on health care. In fact, I have used much of my employer-contributed HSA money on dental care – regular cleanings and a couple of major procedures like wisdom teeth removal. In any case, for someone young with no expected health issues,… Read more »

Dawn
Dawn
5 years ago
Reply to  Jonathan

your employer paid 100% of Premium? I want to work for your company.. I work for the 9th largest bank in US and 3rd largest in Canada and they still take $250 / month for my HDHC plan… with a $3500 deductible for employee+kids. My bank revenue is $246 Million a year and they can’t do better then that.. so where do you work because it would honestly be cheaper for me to go back to school for another degree and work at your job then to stay at mine.

Janel
Janel
7 years ago

I love my Health Savings Account. Over the past three years, I’ve accumulated $2,350 to use towards healthcare expenses. Majority of the money currently in the account comes from my employer so I look at it as free money. I try not to go the doctor to often because I want that balance to grow. I guess these new plans are designed for you to be conscious of your healthcare expenses. I think it was a smart move by employers.

PW
PW
7 years ago

http://www.fairhealthconsumer.org you may be able to price things out here, by state. You will need to get the diagnostic codes and the CPT codes to input for pricing. Docs should be able to give you that. Usually radiologists, anesthesiaologists, and other specialists do not belong to networks, because they don’t have to. And they don’t. You really need to shop around for specialists of that nature that are in-network. if you go to an er for care, frequently many of the providers that are “hands on” are not in-network, again they don’t need to be. If not, negotiate the bills… Read more »

Rose
Rose
7 years ago

I am an HR professional and was involved with the decision to add two high deductible plans to my company’s offering. It made economic sense for my employer and financial sense for me. I have a family plan and the premiums for the traditional PPO plan would have been cost prohibitive. Our philosophy is to cover the employee premium of the PPO plan at 90% but if you add family members, it is at your expense. Other employers do their cost sharing differently, and I respect that each employer has to choose what is best for their employee population. I… Read more »

Becky @ RunFunDone
Becky @ RunFunDone
7 years ago

I just changed employers, and am now stuck with a high deductible plan. I’m young and healthy and have a good amount in savings, living well below my means, so a high deductible plan should be just fine. The problem is that I’m also ridiculously cheap. When I’ve had high deductible plans in the past, I’ve avoided the doctor much longer than I should have, making myself more sick than I would have been if I would have just gone in and gotten antibiotics when any normal person would have.

CCH
CCH
7 years ago

Ditto!

K. Simonsen
K. Simonsen
7 years ago

I can’t get my head around the American health care system. I know the Canadian system isn’t perfect, but so far I have only had good experiences, including an overnight trip to the ER for a dislocated shoulder, multiple X-rays, Dr. visits, and now a trip to a specialist (wait time: one week) and possible surgery, all of which will cost me $0. My mom spent 1 month in the neural ICU and 2 months in the regular neural ward with supportive home care, etc., a few years ago, which cost us nothing. All I could think when I was… Read more »

Toby
Toby
7 years ago
Reply to  K. Simonsen

“. . . all of which cost me 0.” – Only if you don’t pay taxes in Canada.

SAHMama
SAHMama
7 years ago

For me it would be a financial disaster. This year I had a flare-up of my thyroid disorder after my baby was born last December. The flare-up started in January and didn’t get under control until August. In July I had symptoms of a blood clot in my leg and had to go to the ER. It turned out to be a large cyst. I also had pneumonia. Then my asthma flared up. Then a dental x-ray in September showed an unusual growth in my left maxillary sinus. I was sent to the oral surgeon, then sent for a CT… Read more »

Jane
Jane
7 years ago
Reply to  SAHMama

“I’m thankful we have good health insurance.” But whether you have good insurance or not in many circumstances has nothing to do with whether the plan is high deductible or not. I have excellent insurance that would have covered all the unfortunate things that occurred in your life this year. And my plan is high deductible. That is precisely why many of us are urging people to sit down and actually run the numbers. It all boils down to math. In your case, a good high deductible plan might have saved you money this year. Someone doesn’t know until they… Read more »

Natalie
Natalie
7 years ago

Luckily thanks to Obama I’m still on my parent’s health insurance since I’m under 26. Unfortunately my parents live in a different state than I do so my options for doctors are limited…

Brad C
Brad C
7 years ago

You make this post like people generally have a choice to make. Most people are stuck with whatever their employer picks for them. Until insurance is separated from employment there will never be a real answer to this question. Once it is, we’ll have a functioning market and the question will answer itself.

karla
karla
7 years ago
Reply to  Brad C

THIS^^^^ *1000 (or more)

separate health care from employment and let’s see what happens.

hannah
hannah
7 years ago

Um the fact is there is no choice now but to have a high deductible plan. Unless you’re one of the lucky few who have an employer with a low deductible, you’re stuck with high.
Right now we have to pay ourselves for insurance, which means our deductible is from $4000-$6500 PER PERSON, with a family deductible of over TWELVE THOUSAND dollars.
And there is no other choice.

Tim
Tim
7 years ago
Reply to  hannah

Literally no one I know has a high-deductible plan, so your comment inspired me to do some research. Apparently about 20% of Americans are insured via high deductible health care plans:
http://www.star-telegram.com/2013/09/28/5200346/high-deductible-health-plans-are.html

Adrian
Adrian
7 years ago
Reply to  hannah

Exactly! My company, who is one of the largest employers in America switched our entire half a million employees to an HRA/HSA plan with literally NO other choices whatsoever! I am terrified one of us is going to get sick or hurt and I don’t know what we would do. Our deductable is $4,000 with an $8,000 out of pocket limit and that does NOT include drugs. There is no out of pocket cap for drugs – yikes! Who has that kind of money just sitting around? What if you had cancer or something where you absolutely needed those drugs… Read more »

nobody, really
nobody, really
7 years ago

Where I live, our rates dropped. What I had, in comparison to what I will now have, is remarkable (no, I don’t in anyway qualify for subsidies and they don’t apply). It can’t last. I currently have a HDP with HSA costing 686/mo with a 7000 deduct and copays for 2. Come January 1st, it’s actually less expensive to have the cadillac plan (considered platinum), with a 750 deduct. (each, for 2) and no copays for 523/mo. Medications are covered 100%. What? I’m going with it…until next year when its gone.

Jen from Boston
Jen from Boston
7 years ago

I’m very tempted to choose the HDHCP/HSA my employer offers because I love the idea of the HSA. However, only one of my providers is in network for the HDHCP! The deductible for out-of-network is much higher, and using out-of-netwrok exposes me to balance billing (when the doctor bills you for the difference between what the Dr charges and what the insurance company thinks they should be paid). Complicating this is one of my providers will be out-of-network next year for both the HDHCP and the PPO plan I currently use. Running the numbers it looks like I will save… Read more »

Makes No Cents
Makes No Cents
7 years ago

I recently ran the numbers comparing a HDHP vs a PPO, and in the large majority of scenarios, HDHP wins when you account for total annual costs and tax advantages of putting the premium difference in your HSA. This included things like $2,500 ER visits and $25,000 surgeries.

I attached my spreadsheet I used to crunch the numbers; I hope it is helpful to someone!

Linda
Linda
7 years ago

I had to make a decision about an HDHP with an HSA during open enrollment last month. When I ran the numbers for myself last year, it did NOT make sense for me to get an HDHP. I would consider myself generally physically healthy, but I do see a therapist on a regular basis. Back when FSAs were $5k for individuals, I easily spent that amount every year for myself in co-pays, my single daily maintenance med, and the portion of my therapist bill not covered by my PPO. This year my employer sweetened the pot by offering a limited… Read more »

Jen from Boston
Jen from Boston
7 years ago
Reply to  Linda

Interesting question. An annual exam will have a different effect than ongoing regular office vistis. I think it would also depend on whether the therapist is in-network or out-of-network, the deductibles for in- and out-of-network, as well as the out-of-pocket limits.

Edward H.
Edward H.
6 years ago

Fortunately, our HSA is grandfathered. The deductible is $6000 and we have never met it. Of course, we are very happy with the plan, especially since we do not qualify for subsidies.

Kate
Kate
6 years ago

High Deductible plans don’t work for me a 3 month supply of my asthma medications is over $1100. I just don’t take my medications anymore and wheeze and don’t sleep at night much. Sure I have less energy to deal with life but at least I can afford food and housing for my family. My husband’s insurance plan sends me letters telling me I don’t take my medications enough and should control my asthma more and go in monthly to the doctor. They must think my husband makes a much larger salary than he does.

Bob S
Bob S
6 years ago

The U.S. businesses would be more competitive (and provide more and better-paying jobs) if they focused on their core business instead of spending time and effort on managing their employees’ health insurance, life insurance and other benefits. This happens in every large company and it’s an incredible waste of time and money.

Of course, don’t get me even started about the “value” that for-profit insurance companies add to the health care delivery process.

Yes, I trust a government bureaucrat to make a much better decision about my health care than a for-profit insurance bureaucrat will.

highdeductiblessuck
highdeductiblessuck
5 years ago

I have a high-deductabible plan, and it sucks. I never go to the doctor any more. I haven’t been to the doctor in 2 years.

PW
PW
5 years ago

We were on an HSA for several years through my employer.My husband is self-employed so he was on my health insurance thru my job.Because we are both healthy and rarely use the insurance, with a $2,500 deductible we opened up an HSA account at our bank and was able to deposit the maximum amount of $ into that account, tax free to put in, tax free to spend down. We have the $ sitting in there gathering a little interest but so far no taxes. We loved it. My husband had a bill for $500 for eye glasses, we used… Read more »

Lisa
Lisa
4 years ago
Reply to  PW

It only works if you have extra money to put into savings. Most people simply don’t.

Dee
Dee
4 years ago

High deductibles are a disaster. My daughter has a chronic medical condition and we are $6,000 dollars a year in the hole in medical debt for the rest of her life. Will most likely file bankruptcy. Healthy young Americans just do not understand the impact of one serious illness in their family! The ACA is NOT affordable with skyrocketing deductibles every year. Your one medical test away from being thousands in the hole! Have several family members with chronic medical conditions and you will not make it! We make too much to get medicaid and not enough to afford these… Read more »

Lisa
Lisa
4 years ago
Reply to  Dee

We are in the same boat. My husband has a medical condition that requires $10,000/mth in medication. His out of pocket max is $6900 so we meet that the first month. I still have my huge deductible to meet so I’m putting off surgery and a needed colonoscopy. These high deductible plans are going to ruin many middle income families. We’ll just remain in debt forever to the hospital. And the premiums aren’t low so we can’t put large amounts in the HSA. These plans are only good for healthy young people…unless they have an accident or surprise illness. Then… Read more »

PW
PW
4 years ago

We just are ending the 2016 Obamacare/ACA insurance enrollment period. It is truly a disaster. Middle class are spending approximately 18% of their income on health insurance that they may or may not use. If they use it they have $5000 or more deductibles. I have had a lot of tears from people on the phone, even HMO’s are not easily affordable. There are little options to offer. Everyone will have insurance, few will be able to afford medical care. If you are young and healthy you may be okay, if you are older and sick the premiums with the… Read more »

Vasile
Vasile
4 years ago
Reply to  PW

Couldn’t agree more.

alttext
alttext
4 years ago
Reply to  Vasile

We need universal healthcare that is not tied to employment.

Rhonda
Rhonda
4 years ago

Here’s a nasty rub… CDHP, $4K out of pocket + $6,850 copay. I have been saving in an HSA for several years so there is some money stashed there but then the emergency situation occurred. Two fun facts: 1. HSA account does not allow more than $2500 payment in a 24 hour period and since we have to pay up front, we have to pay excess out of our checking account. 2. Hospitals – at least the one we landed with – sits on billing for more than 90 days before sending it to the insurance company (no way to… Read more »

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