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How To Manage Your Deductible When You Have a High Deductible Health Plan

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Almost one in five Americans have a health insurance plan known as a High Deductible Health Plan (HDHP). This is not a trivial number.  If fact that number (68 million) happens to be the entire population of Thailand.  So what’s so special about these plans?

The plan might have been purchased through the Health Insurance Exchange or through the growing number of employer-sponsored health insurance plans that are raising deductibles in order to keep monthly premiums low.

The deductible is the amount of money that you must pay out-of-pocket before your insurance starts to cover all or a portion of your medical bills. Minimum deductibles with an HDHP, set by the IRS, are $1,300 for an individual and $2,600 for a family for 2017. It is important to learn how to manage those deductible dollars and even reduce what you have to pay.

Benefits of a HDHP

  • Pay lower premiums – The most obvious benefit of an HDHP is the lower monthly or annual premium, so your up-front, out-of-pocket costs for the plan are lower. Sometimes it’s a roll of the dice – but if you can stand the risk of having that higher deductible then you will typically save money in the long run. These plans can work well for those who rarely get sick, and some may not even spend enough to meet the deductible. Although you might be saving money on the premium, however, you should still have a backup plan if something happens.
  • Manage your care and spending – Paying part of your costs out-of-pocket means that you can shop around and ask for best pricing. Under a standard health insurance plan there are often contracted and non-contracted or out-of-network providers that are either not paid for, or paid at a lower rate with you picking up a large share of the bill. With an HDHP, you can pay for services at lower-priced providers and still apply that cost to your deductible.
  • Health Savings Account (HSA) opportunities – If you have an HDHP and can contribute additional dollars to an has you are giving yourself savings for future use. An HSA is a savings plan that allows you to use dollars for health care when needed, but if not used rolls over year after year as savings. At retirement that money can be used for expenses other than caring for your health. Do not confuse an HSA with Flex Spending or FSA – which must be used each year or the money will be forfeited.

Disadvantages of HDHP

  • High out-of-pocket if anything happens – With deductibles ranging from a low of $1,300 for an individual to as high as $10,000 to $14,000 for a family, you must be prepared to handle these costs. Medical debt is the number one cause of bankruptcy in the U.S., and you must have a backup plan in place.
  • Healthy and young pay less – People who live healthy lifestyles and focus on prevention, and those who are young, benefit more from HDHP plans. Those with chronic illness or who do not focus on healthy living by losing weight, smoking cessation, healthy diet, and exercise will likely pay more out-of-pocket due to increased occurrence of illness.
  • Temptation to skip care – While some individuals spend time shopping around to find the lowest prices, others may skip necessary care – putting their health further at risk. Those who don’t realize that certain screenings are included in their insurance without cost may skip the mammogram or colonoscopy and put their future health at further risk.

Take steps to mitigate these costs

  • Manage your spending and costs – Having an HDHP means that you, the insured, can take more responsibility for healthcare costs and shop around to save money. Since you will be carrying more of the cost, you can look for the lowest price for a test, insist that your physician only orders necessary testing, or only go to the emergency room for truly critical situations. The price for services can vary greatly from one provider to the next, so spend time shopping around. Consumer Reports warns, however, not to choose healthcare by price alone. Read reviews and study the details so you do not sacrifice quality for the lowest price.
  • Use included services – Routine health and screening services like mammograms, colonoscopies, and vaccines are now included in healthcare plans and required by the Affordable Care Act. Take advantage of these services to catch problems early and stay healthy.
  • Talk with your doctor – Ask your physician for advice on where to save money. Your doctor is often your best resource for finding the least expensive but highest quality products, tests, and services.
  • Schedule your care smartly – If you know that you will need an expensive test or service and can schedule it early in the year you will save money later in the year if something else comes up when you have already met all or part of your deductible.
  • Enroll in emergency insurance – Adding emergency insurance – such as critical illness or accident insurance – is an affordable way to help cover some of the costs associated with care and is especially effective when combined with an HDHP. Emergency insurance pays a lump sum or a defined amount to you if diagnosed with a covered illness or condition or if you have an accident. The money paid to you can be spent on the things you need for your care – to help you pay your deductible and other out-of-pocket expenses.

Emerge offers emergency insurance plans to help you meet the costs of the deductible under an HDHP or as a supplement to any plan. We have included an infographic on our website to help you understand how emergency insurance can help you and your family.

At Emerge, our goal is to make insurance for emergencies accessible, and easy to understand and buy so that you can protect your finances and your health. Give us a try today a get a free Personal Protection Plan and Risk Report and learn more about this valuable financial asset you can add to your insurance coverage.

 

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