What Is a High-Deductible Health Plan (HDHP)?
Wonder why you’re paying more for a health insurance plan that doesn’t cover what it once did? Join the crowd! Health insurance has become more confusing and more expensive in recent years. Many of us, even if we still have a health plan through our employer, don’t understand what’s happened.
The newest, disturbing trend is the rapid growth in high-deductible health plans (HDHPs) that charge high premiums for reduced coverage.
A high-deductible health plan includes any plan that requires out-of-pocket expenditure of $1,350 for an individual or $2,700 for a family per year before it pays for medical expenses. For many HDHPs, payment doesn’t kick in until much higher deductible amounts (say, $6,000 or more) have been met. Such very high deductibles mean that we’re essentially purchasing health insurance that covers catastrophic situations.
Still, we need to remember that even HDHPs can save money. That’s because they negotiate reduced rates for specific forms of treatment with health care providers.
For example, a provider might charge $500 for a certain procedure, but your insurance company has previously negotiated with the provider a price of $300 for that procedure, saving you $200 even though you’re still on the hook for $300 if your deductible amount is unmet. Without your insurance plan, you would have owed the provider $500 out-of-pocket.
Downsides with HDHPs
HDHPs caught on with insurance companies and employers as a way to reduce the cost of health care. They reasoned that if we were forced to pay more of our health care expenses out-of-pocket, we would think twice before running off to the doctor with a cold or a sore back. For more serious situations, we would have an incentive to shop around to find care for the lowest possible cost. Since fewer claims would result, insurers and employers could reduce premiums too.
Sounds rosy, doesn’t it? But since more employers offer only HDHPs and because many of us, even on the public health insurance exchanges, can afford only high-deductible plans, recent experience has exposed some flaws in the argument for HDHPs.
1. Many people postpone or avoid altogether getting the health care that they need. A California woman with a $6,000 deductible plan chose not to have surgery to remove what her doctors thought was a benign polyp in her uterus. Months later, surgeons operated, discovered that the polyp was cancerous, and performed a hysterectomy. She continues to be monitored closely, although she appears to be cancer free. Such stories with worse outcomes are not uncommon.
2. Comparative shopping for health care is very complicated. Health care providers often fail to reveal what care will cost their patients, and health insurers will not disclose their contracted rates with providers. Solid information about quality of care is also hard to obtain.
Suppose you shop around for prices on knee replacement surgery. You will find that prices vary widely, that details of procedures and equipment vary, and that providers often avoid justifying such differences. It’s worse than comparative shopping for a refrigerator or a car!
3. The distinction between “in-network” and “out-of-network” is tricky. Insurance companies contract payment rates with a list of specific providers (= “in network”). Only charges from in-network providers count toward your deductible.
Charges from out-of-network providers can balloon to very high amounts. And providers can move from in-network to out-of-network without notifying you.
If you are treated by a hospital medical team, some team members might be in-network and others out-of-network. Finding out which doctors are in-network and making sure that only in-network doctors are treating you is nearly impossible. The final bill in such situations can be a nasty surprise!
Suggestions for Coping
Know your freebies. By federal law, health insurers must pay for many preventative procedures at no cost (neither co-pay nor co-insurance) to you. Check out the official list of free preventative services. The list includes annual physical exams and many other services and treatments.
Shop around for both price and quality. This will not be easy. You will need to contact your insurance company (online or by phone) to learn what services are covered and, as much as possible, at what cost in their network. Then you should contact individual providers (physicians, hospitals, medical centers, etc.) to learn as much as they will reveal about possible cost. Finally, check rating services or ask a trustworthy health professional about quality of care. Be persistent.
Talk with your doctor about what treatment or medication you need and how much it will cost. Bear in mind that many physicians do not have accurate or complete information about costs, especially when prices vary widely. And not all physicians are comfortable discussing such matters. But you might remind them that financial stress is also bad for your health.
Try to schedule expensive treatment early in the year, before your deductible resets. Doing so can save you a lot of money.
Use non-taxed funds to pay for out-of-pocket medical expenses. See if your employer offers a Health Reimbursement Plan. Check into whether you qualify for a Health Savings Account, perhaps one that your employer supports.
Remember that only in-network charges count toward your deductible or overall cap amounts.
Other Useful Tips
A provider’s flat fee might be lower than a patient’s financial obligation would be if a claim were submitted to the insurer before the deductible amount has been met. Although health care providers are required to submit insurance claims for patients who have insurance, some patients withhold insurance information for routine, non-life-threatening situations for which they must pay out-of-pocket. This might save them money especially if they cannot use funds from a Health Savings Account or can’t afford to contribute to one. (If you have a chronic condition that is expensive to treat, this option might not be advisable.)
Ask your doctor about how you can save money on prescription medications. Sometimes a cheaper alternative medication or a generic form can be used. There might be trade-offs in effectiveness, however. So always ask for professional help in making such decisions. And never reduce dosage to save money without consulting your doctor.
When purchasing prescription medications, decide whether you should use your insurance. For occasional purchases, ask your pharmacist what the cash price would be. Often, it will be lower than what you would pay by using your insurance card, especially if your deductible is not yet met. This is because of the rate that the insurer has negotiated with the pharmacy. The pharmacist is not permitted to remind you or initiate discussion of the cash price with you, but the pharmacist is required by federal law to tell you what it is when you ask. Such purchases will not count toward your deductible.
Save on prescription medications also by using a discount card. Companies such as GoodRx offer deep discounts on prescription drugs. Prices can vary widely, though, by pharmacy. Drug manufacturers also offer discounts, typically for persons who meet certain financial qualifications.
Get medical attention when you need it. Sometimes, of course, a minor illness or injury will heal if given a little time. But you should not ignore symptoms that might indicate a serious condition. Doing so could result in a more severe situation that will cost you a lot more money and, possibly, your long-term health.
Coping with high-deductible health insurance plans for medical treatment and prescription medications is perplexing, difficult, and time-consuming. At Kathy’s Urgent Care, we try to be as transparent as possible about costs to help you manage your health care responsibly.
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