Why I (Heart) My High Deductible Health Insurance Plan

by Linsey Knerl on 22 October 2008 67 comments
Photo: aussiegall

I won’t lie.  My romance with my health plan wasn’t love at first sight.  I was newly self-employed, and looking for just the right balance of benefits and affordability was nerve-racking.  I was lucky.  Many of my friends were smokers, had a long list of pre-existing conditions, or just waited until they had an illness to look into getting a self-insured plan.  Being a worrier, I knew that now was the time to lock in something, anything, while I was still in good health.

Low monthly payments.  Sure I could COBRA my previous employer’s plan.  It was, after all, an excellent plan with all the benefits of free health visits and a low deductible.  It was also $1400 a month for my family.  I’m sure on my self-employed salary I could swing that (but also give up food and clothing for the next two years.)  The high deductible plan, on the other hand, came in at a nice price tag, making it much less painful when they automatically took the premiums out of my checking each month.

Basic preventative care.  In order to keep my monthly premium low, I needed to be sure it wasn’t loaded up with too much preventative care coverage that wasn’t subject to the deductible.  It was a careful balance finding a plan that gave me the basics (once a year health checks, an annual OBGYN testing, etc.) without going overboard.  Since I had been to the doctor exactly 1 time in 2 years, I know that the deluxe plan with 6 free visits a year (and costing about $200 more a month) was a want and not a need. I opted for the plan that gave me essential preventative care before meeting my deductible requirement, and nothing more.

HSA eligibility.  In reality, I don’t use my Health Savings Account much.  It was easy to set up, however, and it helped me to avoid taking a tax hit on extra income this year.  Being self-employed, it’s painful enough paying my own Social Security Tax.  My HSA hooked me up with a debit/credit card that I just swipe at the pharmacy or give to the billing office at the hospital.  (And did you know that many of the Walgreens Free After Rebate deals are HSA eligible?  Double whammy.)

Accountability.  Being accountable for my own healthcare costs may not seem like an advantage at first.  After all, when it comes to any medical expenses below my deductible, I’m the only one responsible for paying.  Being forced to pay these expenses, however, has made me take a good look at what I’m using my medical care for, and I’ve taken steps to reduce my cost, while making sure I take care of medical issues while they are still affordable.  I will be getting my flu shot.  I’ll eat healthy, try to maintain a healthy weight, and not overindulge in behavior that could be risky to my body or my premium rates.  I’ll also be mindful of DIY preventative practices like breast self-exams, using sunscreen, wearing my seatbelt at all times, and having regular dental cleanings.  These are things I should have been doing anyway, but with the burden of the high deductible on my back alone, I’m taking extra steps to cut costs while ensuring my insurability in the future.

Negotiated pricing.  People often roll their eyes at the mention of a high-deductible health plan.  “You pay $5,000 before insurance covers anything?”  They don’t see the benefit of such a plan – especially since I’m not likely to use anywhere near $5,000 in medical services in a typical year.  Then I explain the benefits of insurance negotiated pricing.  I can walk into my doctor, present my card, and arrange for my insurance to be billed.  Yeah, I understand that eventually the bill will come back to me (without my insurance paying a dime), but the wonderful thing is that it is usually 40-60% cheaper than when I first walked in.  My insurance company can use their pre-contracted rates to get me savings I might not have had on my own.  (Note:  It is possible to ask your doctor to bill you at a negotiated rate, but they don’t have to.  By sending it through your insurance, you are guaranteed their contracted rates, plus you get an additional 30-60 days to get your finances in order until the bill comes.)

I understand that a plan of this type isn’t for everyone.  My parents, who are older, have a few medical conditions, and use services more regularly, wouldn’t get as much mileage from this type of plan.  For someone with a pre-existing condition that needs constant treatment, this could be too pricey to justify.  For a typically healthy self-employed person, however, it is a good start.  Assuming you are in good health, and can get a deal where they lock in your rates for a given time period (2-3 years, for example), it gives you decent coverage for the near future at an affordable price.

Maybe, with the economy changing and an election on the horizon, my love affair with my health plan will fade into a fond memory.  But for now, I still truly (heart) my high-deductible health insurance plan.

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Philip Brewer's picture

You hit the nail on the head about the negotiated rates.

I found that out when I was still an employee.  The site where I worked was "out of area"--i.e. we were small enough and far enough away from any big site that the company didn't think it was worthwhile to negotiate rates with the local health care providers.  The result was that we got billed the regular rate.

Back in the 1990s that wasn't so bad.  Since then, though, the "regular" rate has changed from being the ordinary rate that most people pay to being the special extra-high rate that only losers pay.  My insurance paid at the 90% level, but it only paid 90% of "reasonable and customary" charges.  As more and more people paid negotiated rates, the regular rates became less and less customary.  Toward the end there, I realized that I didn't really have insurance at all--the 90% of "reasonable and customary" that the insurance company would give me fell so far short of the actual charges, that a serious injury or illness would have bankrupted me.

Negotiated rates are probably the most important part of an insurance package now. 

Guest's picture
GEoff

My experience is just the opposite, my wife and went without insurance for a few years when my company upped the prices. Every time a Doctor's office found out that we didn't have insurance they immediately re-did the bill so we were paying 40-50% less than they charged the insurance company. This was across several doctors in different areas of the country (Texas and Washington DC).

Guest's picture
Guest

Doctors and other health care service providers BILL insurance companies what they would LIKE to be reimbursed. However, the proof of what insurance companies actually pay is seen on the Explanation of Benefits (EOB). In most cases, the payment is 50, 60 or 70% less than what the provider has billed. Yes, some physicians (and the occasional hospital or laboratory) will adjust their bills for the uninsured, but know that this price is rarely less than what the insurance company had contracted to pay.

My husband is a small business owner, and we have an HSA compatible High-deductible PPO. This plan works as insurance is supposed to. We pay a fee to be covered should the unthinkable occur, and in the meantime, we benefit from the insurance companies pre-negotiated rates for services. If we have a healthy year, we save the amount in our HSA and pay premiums for the security insurance provides. If we find that we're ill or injury prone, we shell out the additional up to our deductible (and with the insurance company's fee schedule, we usually don't meet the deductible, even with three children!) But even with a year when we might meet the deductible, we're still not spending close to as much as a group plan's premiums would cost us!

These plans are going to be how more and more families have portable, affordable health insurance.

Guest's picture

I couldn't agree more with everything you've written. I went the same route last year when I retired and had to provide for my own health insurance. Like you, I found COBRA expensive and it would only have lasted for 18 months; I needed insurance for the long-term.

It is frustrating, though, that we have to have insurance in order to pay the lower negotiated rates. I don't have dental insurance so I end up being charged considerably more than when I did have employer-provided dental ins.

Linsey Knerl's picture

Dental discount plans are one solution.  They technically aren't insurance, but they are also usually more affordable.  I use my discount plan to knock my service fees in half at my local dentist.  No fancy billing practices.  Just show them the card, get the discounted rate, and I pay upfront with my HSA debit card.  Cheaper than I could ever do on my own.

Linsey

Guest's picture
Tim

How do you know what Walgreens deals/items are HSA eligible and which ones are not?

Guest's picture
Guest

Unfortunatley, I think Walgreens has done away with their 'Easy Saver Catalog' which is the source of ''free'' stuff with rebates. But for list of items look up   

www.hsahealthplans.com/hsa-qualified-expenses.html-

Guest's picture
David

Keep in mind that not only do high-deductible plans make you pay more for routine medical issues, they also don't cover as much as full plans do. I had a high-deductible plan, but after a brief scare of leukemia and then getting a melanoma cancer removed from my leg, I had to shell out over $10K of my own money AFTER my deductible was met, all in one year. Just something to think about and keep in mind. Sickness can happen to anyone, anytime.

Guest's picture
joanna

You've listed all the reasons we love our HSA/HDHP too. Being young and healthy helps us out- and the plan covers us for emergencies. I'm excited to fund our HSA to $5,000 then not worry about it practically at all!

Linsey Knerl's picture

I agree that not all high deductible plans are alike (just as all low-deductible plans aren't alike.)  You can get just as much, or as little, coverage as you wish, including riders for things like maternity benefits.  Mine covers all illnesses and diseases up to $5 million, including transplants, cancers, etc.  It also pays 100% after my deductible, meaning that once I pay my 5K, I'm done for the year.  It's possible to get just as adequte coverage as you would need in any emergency situation, you would just need to be vigilant about reading all the fine print and making sure you're covered BEFORE you purchase the policy.

Linsey

Guest's picture
Guest

may I ask what insurance you have? it's something worth looking into!
thanks

Linsey Knerl's picture

You will have to know that kinds of items are covered, and it may vary from plan to plan (your plan should have a list.)  They are usually identical to those items that are covered by a FSA (Flexible Spending Account) and include pain relievers, cold/allergy meds, first aid items, etc.  Walgreens will indicate which items are FSA eligible with a symbol on the receipt.  You should know in advance, however, to be sure you are only buying those thing in a single transaction that are allowed by your HSA plan.

Linsey

Guest's picture

I'm mid-20s, on a high deductible plan with an HSA, and find that it definitely suits my needs as well-- for now.

Even though my negotiated prescription rates are decent, I've found that at pharmacies you can save even more money by signing up for their generic plan-- I get my prescriptions from Walgreens and their price is 50% of the insurance-negotiated price, for the same drug. Costco, Target, Walmart, RiteAid etc. have similar programs too.

Plus, the prescriptions are eligible for HSA spending so as you pointed out, I can use my pre-tax dollars for those purchases. You'd be surprised at what else is eligible-- gel insoles for shoes, contact solution, etc. Not a bad deal if the insurance plan is right for you.

Guest's picture

We have to agree with you on many of your points. Although most of us are still working for an employer that has only a few options for health insurance. Personally we like to follow Dave Ramsey and the debt elimination crew bandwagon and have enough saved up for any type of emergency.

We believe that a person should have an emergency plan that is at least 3 to 6 months there annual salary, that way you aren't loosing money paying for a high deductible plan. So if God fordib you should need to utilize your healthcare for an accident or illness, you will be able to deduct it from your savings. Easy as that, and then you replenish that money ASAP. We find that it also relieves so much of the stress that most people would have during these types of situations.

Also, if you are married or have children, by all means elect your spouse as a power of attorney or as legal representation if you are incapacited and need vital decisions made.

Another wonderful message approved by ManlyHunter.com,
Go ManlyHunter.com your life will thank you!!!

We support WiseBread.com, there advice rocks.

Guest's picture
Michael

I'm with you. I'm self employed and recently my wife had our second child and decided to stay home with the kids. After covering all our bases we found that a high deductible plan with Aetna was going to be our best option. We took a sum of money to cover the deductible and put it in a high-yield checking account in case we need it. We are pro-active with preventative care whichs shifts favor to our side even more. If we have to use it that is fine but we keep more control.

Guest's picture
Stacey07

My husband has a high deductable plan, and he loves it for all the reasons you've listed - he's never sick, so he doesn't mind paying for an office visit once every three years. HSA's are awesome, too.

I have a standard HMO. While I'm healthy, I do buy two prescriptions each month - generic birth control and allergy meds. Neither raised my premium because they are generic... but I would have to pay out of pocket until I hit $5,000 if I had a high deductable plan.

These plans are GREAT for some people - but do the math yourself, and request several quotes. I'm paying $10 more per month to get $40 more in pharmacy benefits.

As a side note - spouses can use their spouse's HSA. We use his money to fund the account, and it pays for all of our expenses - from my meds and contacts to his ocassional doctor visit.

Guest's picture
Guest

Regarding the person above who paid out of pocket when they were sick with a high deductible plan. I have a High Deductible plan and my youngest daughter has congenital heart defects. She had surgery this year and we only paid $5K out of pocket. This includes our prescriptions which is a huge savings compared to the other plans available to us.

Myscha Theriault's picture

This is a slamming article, Linsey.

I too would love to know more about which Walgreens items are HSA related. Are you by chance planning a follow up post?

Guest's picture
David

"It also pays 100% after my deductible, meaning that once I pay my 5K, I'm done for the year."

I don't know what company/state you were in, but our plan with BCBS of California ($2500 deductible) did not cover everything above the deductible and they don't cover all tests/procedures, either, if you are not on a full coverage plan. Just for those in CA, be aware - my high-deductible plan cost us over $4000 a year for both of us, and then an additional $10K in other bills for my meds/tests/biopsies, ct scans, etc. Hopefully its not like that in every other state.

Guest's picture
Guest

I am California. Good to know. Thanks for pointing this out.

Guest's picture
AnnJo

The only complaint I have about my individual catastrophic plan is that since the Democratic Party took over the Insurance Commissioner's office and the State Legislature of my state (Washington), they've been tacking on all kinds of required benefits, like acupuncture, chiropractic, naturopathic, massage therapy, mental health benefits, etc., which has more than doubled the premiums even allowing for the fact that I've changed age categories. And for a while, it looked like they were going to drive all private insurers out of the state with mandates to extend coverage with no limits for pre-existing conditions - kind of like allowing a homeowner to buy homeowner's coverage after the fire started.

My deductible has varied between $2,500 and $1,500 depending on the plan choices I've made (right now it's $1,750) and my total potential maximum out of pocket per year has varied from about $5,000 to $6,500. After my deductible, my coverage is 80% up to the out of pocket maximum and 100% above that. So a medical bill of $4,000 would cost me $2,200. The next $15,250 of bills would be covered at 80%, so I'd pay $3,050, and above that the insurance company would pay 100%.

Many years ago, I was in an HMO for a year and HATED it. Everything was a bureaucratic maze, totally wasteful of my time and ignoring my convenience and with other people making all the choices for me. Yes, it covered everything, but you had to work for that coverage and wait for your turn, so if you had a merely annoying medical problem that made your daily life miserable but wasn't going to kill you, you could wait for weeks to wade through all the screening appointments to get to the person who could actually diagnose and treat it.

The freedom of choice, the fact that doctors actually treat you like a valued customer (because you are) and respect your time, and the ability to go right to the appropriate specialist without having to go through "gatekeepers" are all extra value associated with many of these plans.

Love it, love it, love it. Dread the thought of what politicians will do to it under "universal health care," and don't tell me it won't do anything because I've seen what their "help" has already done in the way of added cost.

Guest's picture
Guest

Support any politician that demands that the for-profit insurance companies be taken out of the system completely, and those companies will never have the power to hurt you again.

Linsey Knerl's picture

I'm reluctant to tell you what insurance I have, only because it is more dependent on location than company.  I live in Nebraska, where regulations are different, so if you don't live here, I can't guarantee that the same company will be able to offer you a similar plan.  I can tell you that I used several online comparison shopping tools to find my plan,  Ehealthinsurance.com being one.

To be quite frank, it's unfortunate that everyone in the U.S. doesn't have the same opportunity to buy competitive plans.  It's a big disussion in the upcoming election, as both candidates having opposing views on how state-specific regulations affect pricing.  I have my own opinions, as well :)

Linsey

Guest's picture
Terri

I have to agree different states have different regulations. We move around quite a bit so we use www.efinancial.com. I love their learning center, if you are unfamiliar with insurance terms they have the information at your finger tips. In addition, if you are interested in the hot economic topics there interactive blog at Efinancial Blog is a great way to express your own opinions.

Guest's picture
shifty

Anyone have any recommendations for HDHP in massachusetts? I'm trying to find one and it's so hard to compare them all. I consider myself pretty informed about this stuff so if I'm having a hard time picking a good plan I can't imagine those who don't know how parts of this work.

My wife and I are very healthy but going to have a child in the next year. I can't figure out what plans would cover that the best.

Guest's picture
Guest

I have four children. A high deductible plan doesn't work when you're at the doctor's at least once a month with one child or another. My work offers a high deductible plan and you pay $3K for a family. Then they start charging you co-pays etc.

Linsey Knerl's picture

and coverage for them varies.  We have, in the past, used the state-offered program (SCHIP, as it's called in some areas.)  We have also paid out-of-pocket for expenses on a high-decutible health plan.  All in all, we've been lucky, as our regular visits are fairly inexpensive (we see a Physician Assitance when we can), we use health clinics for shots and vaccinations, and we otherwise avoid bringing them in for anything that could turn out to be another "just a cold/flu/allergies" diagnosis.  But I agree, it is costly to add kids.

Some plans are much better than others, so do your research before committing, and ask your local health and human services office about low and no-deductible discount plans or health care if you are considered below the poverty line.  Keeping kids healthy is worth any stigma that may be attached to accepting help.

Linsey Knerl

Guest's picture
Guest

We own a farm and have 2 full time employees that we pay health insurance for and also for our own family. It would seem that if we went to a high deduct. health plan and put the savings into individual HSRA's we might actually have money left over in our hsra's at the end of the year that can roll over into the next year and grow each year and if the difference between the insurance that we are paying for now and the high deductable is more than the decutable wouldn't it make sense to switch? Our regular insurance costs us about 12000.00 per family and a hd plan would be about 7900 a year with a deductable of 2500.00 that would actually be a savings of 1600.00 a year. Since we already pay for the health insurance for our employees (they don't contribute anything) wouldn't it make sense to switch. The hd plan pays prescriptions 7.00 for generic 25.00 for level 2 drugs and 50% of level 3 drugs, the current plan we have we pay 10.00 for generic and we pay 100% of level 2 and 3 drugs. That alone would save me about 400.00 a month it just seems like a no brainer to me. Am I missing something

Linsey Knerl's picture

It sounds like you have it figured out.  Sometimes the best money decisions are a simple math calculation.  There is a risk with HD insurance... but it will usually be no more than the actual deductible.  If you are healthy and stay healthy, however, you can save big money.  Good luck!

Linsey Knerl

Guest's picture
Jenna in Miami

I'm purchasing individual insurance - with a high-deductible plan, is it true that I would have to pay for all of my doctor/office visits until I reach the designated deductible amount (for example $3000)? I have to pay until I reach that amount and then my insurance would start covering? Is that true?

Thanks!

Linsey Knerl's picture

Unless your plan has a special offering that gives you office visits (my plan, for example, gives me one free physical and ob gyn visit a year -- a friend's plan give her 4 visits for any reason a year), then YES you would have to pay all medical costs up to the $3000 deductible.  That is why it is the best deal if you won't be going to the doctor all the time, or if the $3000 out of pocket makes the lower premiums worth it.

We went to the doctor twice last year outside of our one free exam.  One was for a tetanus shot incident and the other for a sprained hand.  Yes, we did have to pay out-of-pocket for both visits, but remember, the bill went to the insurance first, anyway, and they worked it down to their discounted rate (60% of the original).  So we still saved money.

Good luck!

Linsey Knerl

Guest's picture
Pat

We switched our policy this year on 7/1/08 to a high deductible HSP. We never received a copy of the policy which, of course, we should have pursued. We just met our deductible of 3000 by the end of 2008 only to find our after receiving our first EOB for 2009, that the deductible year begins on 1/1/09 (calendar year instead of policy year). Although Aetna credits your deductible met for 2008, which was 1000, this somehow does not seem to work.
If we were to switch back to lower deductible 7/2009, we would never receive the full benefit of the one year policy period since it starts twice in one policy year. It seems that the policy should be prorated. Has anyone else encountered this problem? thanks.

Guest's picture
Midas1

One of the biggest problems with the U.S. healthcare system is the number of people who run to a doctor every five minutes. People on Medicaid in particular have no reason NOT to go to an emergency room for every scratch because they never pay a bill. Now, as usual, because of a few the majority takes on the pain of paying. We have a nation of worried well. People with chronic diseases don't go to a doctor as much as the hypochondriacs. I'm tired of paying for a high-deductible plan at a rate of $417/month just to see a few abuse the system at our expense. If you smoke, are overweight, or visiting a doctor more than once every three months you need to reassess why you need such frequent care. Many people are using the healthcare system for attention, not health care.

Guest's picture
Guest

This is true (to an extent), but the people who are "using the healthcare system for attention" are far more apt to be the elderly than poor people on Medicaid. Contrary to the belief stated above, most people (poor or otherwise) will avoid going to the doctor at all costs. If you're eligible for Medicaid, you're still going to have to wait in a dingy clinic or emergency room for hours on end. Not a good incentive to run to providers for care.

Our premiums go up due to a few reasons. First, those premiums are paid to private insurance companies who must turn a profit for their shareholders. These insurance companies also must pay an army of people to fight with doctors over what they will or will not cover. Also, the for-profit healthcare providers is responsible for much of our higher premiums. It is not the patient, but usually the doctor, who will often insist on unnecessary tests that yield little to no benefit, but that they know they can bill to the insurance companies or the government (Medicare/Medicaid). The patient usually will go along with whatever the doctor suggests. It is extremely rare for a patient to lobby a doctor for some invasive, expensive test, that the doctor is telling them they don't need. It is far more often the other way around.

Some say the doctors and hospitals over-test due to fears of medical malpractice, and not out of pure greed. This may be true, or it may not, but it is important to know who is responsible for why our premiums are going up. And it's not the people on Medicaid who are running to the doctor for scratches.

Guest's picture
Guest

Like many other health plans, high-deductible plans are best if you don't actually need them. NEED them, and it's a different story.

I thought I was covered; I pay $300 a month for our family plan (my employer pays the other $200/month). I put an additional $280 a month into the account, which should be enough to cover the $3500 deductible. At first, when we had no need for health care, it seemed just wonderful.

However, we not only have to pay the first $3500, we have to pay 10% of everything over that. Which seems great if you're talking about a $70 doctor visit, but not so good when you're talking about a $66,000 emergency surgery and week-long hospitalization.

Fact is, it was the only first year we liked it. The second year I had a baby (negotiated rate: $10,000) near the beginning of the year, so $3500 + $750 = $4250 bill without the money in the account to cover it. Maybe I should have avoided that cost and just had my baby at home? I guess that's what the designers of the plan wanted, but I didn't really want to take that risk.

Then there's the first year of well baby visits, which with all the vaccinations can run $1000 in a single visit. By the time we paid off our medical debts, baby #2 put us back in it. And before we could get that paid off, my husband turned up with a life-threatening medical condition that people in their thirties are not supposed to get.

Thank God for payment plans, I guess. We've emptied our account, which I already put the maximum into, and still have a $5000 debt. Doesn't really seem worth the $300 a month I paid for the insurance.

Think twice; you never know when illness might strike. Don't buy a plan assuming you are going to be healthy, ESPECIALLY if you want to have a baby.

Philip Brewer's picture

@ Guest:

Not much use at this point for you, I suppose, but other people might see this and be helped.  There's another number you need to pay close attention to, besides the deductible:  The out-of-pocket maximum.

Because of exactly the problem that you refer to, a good insurance policy will set a maximum amount that policy holders can be out-of-pocket.  When what you pay (deductible plus co-pays plus your 10% or 20% of the fee) adds up to that, the insurance starts covering 100% of the charge.

I wrote about this a while back in Health Insurance:  Two other numbers to look at.

Really, for determining whether the policy is really insurance, the out-of-pocket maximum is the most important factor.  If that number is something you can afford, then your insurance will do its job--keep serious medical problem from bankrupting you.  If it isn't, then you don't really have insurance at all (you've got some sort of pre-paid medical plan).

Guest's picture
Guest

I am looking at HD ins and HSA account as I just left a corporate job after 35 years and with the cobra option near $1K per month and that being for only 18 months. I am 60 years old so I need something more long term. I see nobody tells who they are using and I understand that may not be proper for this thread but I would like a short list of companies that they chose from. I live in Tennessee if that matters for coverage.
Thanks.

Linsey Knerl's picture

For making those points.  I agree that you have to know those numbers well.  I made sure that I got a plan with no out-of-pocket after the deductible (the insurance paid 100% of everything after my deductible was met.) My maximum out -of-pocket was the same as my deductible (no more than $5,000 for my husband and I a year.)  For us, it is still a really good deal, but not everyone will have this type of plan available to them.

Linsey Knerl

Guest's picture
Guest

I'm in the process of looking into health insurance for myself and so have read this thread with interest. I agree with the comment that it is really important to consider the maximum out of pocket for a policy. It is also really important to read through the list of Limitations and Exclusions for the policy, since the policy will absolutely not cover these items.

Guest's picture
MS

Yes but what happens when you get sick? I realize this sounds great for when you are healthy (which I am too). But what happens when the unexpected happens? No one plans to get sick...no one plans to get cancer...no one plans to blow out a knee (as I did). So then what?

I think it's great you've found something that works, but I know for sure that the system is broken.

Guest's picture
DC Mike

One of the key steps in making a high-deductible plan work is to ALSO set up a Medical Savings Account (MSA or HSA). Save a portion of what you WOULD have been paying (wasting?) for a low-deduct account, and you will soon have your deductible covered, tax-free, with interest... and it's YOUR money!

But you MUST set up a dedicated MSA/HSA to get the maximum benefits.

Guest's picture
jeff

i can't believe that all of you are singing the praises of the high deductible hsa plans. these are being pushed as some great thing that has already "fixed" our healthcare industry. what a load.

i pay $250 a month for my plan. Which is $3000 a year. As a student, this is a HUGE expense. What do I get for this? It covers NOTHING. The ONLY thing I get is some coverage if I were to get in a serious accident or become seriously ill. And if you think the insurance industry has not figured out that on the whole they will ALWAYS make money off of the individual you are crazy.

I couldn't even pay for a stupid flu shot with my HSA funds!

While these accounts may be better than other options, it is a sad state of affairs that we are held hostage by the insurance industry. You can bet your $250 a month premium goes mostly into paying lobbyists to convince the republicans to do nothing so that we are stuck paying to continue to enrich the insurance industry.

Guest's picture
Rick

That's how ALL insurance is - you pay for something you hope you never need. With insurance, you are paying a company to assume some or all of your risk of financial loss.

With life insurance, you are paying for them to assume the risk of the loss of your income that would result from your death (which would be an undue financial burden for any dependents you left behind).
With auto insurance, you are paying for them to assume the risk of loss of money for the repair or replacement of your vehicle (something you likely couldn't pay to repair or replace on your own).
With your health insurance, you are paying the company to assume the risk of the cost to diagnose and/or treat an accident or other adverse health event.

In all cases, the more risk you wish them to assume (lower deductible for you), the more you pay (higher premium).

So, rather than sounding rather ignorant (uninformed) and whiny by saying your premium goes towards lobbying Republicans rather than being invested to hedge the risk you're paying them to assume, try to learn what insurance is.

As for your HSA funds not covering your (agreeably) "stupid flu shot", you must have been misinformed somewhere along the way.

Guest's picture
Hannah

The whole concept of insurance is nuts. How about just making health care affordable? Instead of $10000 to have a baby. The Mom does all the work. So why don't we do anything about it? Because we're Americans. In Egypt or Iran when they don't agree with their goverment what do they do? they rally in the streets in protest until they get what they want. In America we fear the Government. In other countries, the goverment fears the masses and they get what they want.

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Guest

@Rick

You've compared apples and oranges. Life insurance is significantly cheaper than health insurance, with most polices for someone who appears to be in Jeff's bracket paying no more than $5-$10/month. Auto insurance is usually for someone else's benefit, as many young people only carry collision.

Health insurance is a whole other ballgame. I believe what commenter above was saying is that he is shelling out $3000/year and he may still wind up with an annual maximum deductible, combined with procedures the insurance company won't cover, that could potentially force him into bankruptcy or long-term debt. All because he had the misfortune of getting ill.

$3000/year (which is cheap for insurance industry premiums), is an enormous strain on the finances of most working-class Americans, especially when they will have to dish out a large deductible. There are a few industries that never lose, and not a moment should be spent feeling sorry for them; Big Pharma, Big Oil, Big Banks, and Big Insurance.

Guest's picture

I am considering getting a Health savings account and high deductible program. What is best? I need something only for myself. I am not above getting no insurance at all because without insurance I can use private charity clinics for basement prices and would be eligible to pursue private charity help for catastrophic. I am against going on the dole or using any HMO style corporation which gets government handouts(most people on HMOs are unaware that they are on welfaer, but they are) I believe cash causes lower prices. I had a dental emergency that was gonna be 7000$ and I have shopped around and when I'm done w all the work it should be 600$ which I had saved up. This was because of shopping. I am in a pickle because I def do not believe, morally, in using insurance as "prepaid medical care". Since I'm young, it makes sense to get catastrophic coverage, but if its going to cost me more than it pays out... I want something with a low monthly payment, like with a super high deductable so if its a 10,000$ thing or more I'm covered and to be able to chip away at an HAS at my leisure. Does such a plan exist?

If the obamacare forced insurance mandate passes I WILL refuse it even if it requires jail. I will not be robbed by force of government gun by the insurance companies. They will have me by offering a good deal and a good deal alone. An insurance mandate would be an immorality on the level of theft. I can't afford to forgo food and shelter for "prepaid medical xcare" that I might not use.. And we all know that wed just be getting the "get legal" catastrophic plans and wed be paying 3x as much for them in order to cover everyones mandated preexistings and for people who use the hospital as a drug hotel

Guest's picture
Guest

No worries, you won't have to "go to jail," and the provision for health exchanges that kicks in in 2014 should make the cost of an insurance plan cheaper than it is today.

Also, I don't know too many people who crave staying in a hospital, but I know plenty of for-profit hospitals who are more than happy to keep those patients in high-priced beds for as long as they can, and wrack up an endless series of unnecessary tests. So it's important to know where the blame lies.

Lastly, of course the insurance companies are a major racket. But it's important to know where to lie the blame. Remember, the Dems and Obama weren't the ones pushing for the insurance mandate. That was the insurance companies themselves. The Dems and Obama wanted a non-profit "Medicare for All", which would've cut the insurance companies out of the game entirely. The insurance companies were never going to allow that to happen.

Guest's picture

Great article with comprehensive info about high deductible health insurance plan. I think many consumers of health care can benefit from such a plan. There is a better way to maximize savings potential though w/ a HDHP.

Combine: high deductible health plan + aggregate wrap + benefit administration and partially self fund the liability in excess by electing the higher deductible. Capitalize on your savings greater and save what you do not use in claims.

Great to see the discussion continued though! Congrats on your success!

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Guest

From purely and economics/statistics point of view. people always make the same mistake of insuring things they can afford to lose, don't do that, insurance companies make a killing from people insuring their stupid phones, remember they always know the probability they are going to write you a check, you don't (other good examples here are dental and vision coverage). Only insure things you can't afford to lose. I think if the Gov is looking for the fat to cut from the medical system it's in this area (I'm a democrat who studied mathematics at one point in my life). set your deductible with this in mind, If you get a $5000 dollar bill in the mail today would it bankrupt you? or a $50,000 or $500. People seem to push their employers for excessive medical coverage and then health providers can charge whatever they want for things you don't need, (you don't think it cost you but it catches up, it has to). trim back your insurance coverage, pay for as much out of pocket as you can afford (using an HSA is a great way to do that) and by all means insure the rest, you'll be richer, the medical system will have to be more honest about small cost and we'll all be better off (except insurance companies that have people brain washed into thinking they need excessive health coverage, they will get screwed). High deductible health insurance is where it's at, if we don't embrace this we have to go with universal health care, but personally I prefer to have an open market for the low cost stuff, I think it'll be better.

Guest's picture
Rick

Absolutely! Why in the world do most people pre-pay their healthcare costs and think they're getting a good deal? If our government schools are failing us so badly that we can't figure out that paying the insurance company to pay the doctor will cost more than paying the doctor ourselves, how badly will government healthcare fail us?

For those of you who still don't understand:
OPTION 1: In my situation, I could pay around $1200/month ($14,400/year) for a family plan that covers just about everything, with a maximum out-of-pocket of $2000 (deductibles and coinsurance). My MINIMUM annual cost (if no one in the family had any medical needs) would be $14,400, and my maximum cost would be $16,400.

OPTION 2: I could pay around $350/month ($4,200/year) for a high-deductible family plan that covers just about everything after my $10,000 deductible. My MINIMUM annual cost would be $4,200 (a savings of $10,200), and my maximum annual cost would be $14,200 (a savings of $2,200). If I save the maximum $6000 (+/-) annually in my HSA, I will have that much in pre-tax dollars for my medical expenses - and if I could afford Option 1, then it should be easy to fund savings. If I had $2000 in medical expenses in a year, paid from my HSA, I'd be saving $10,200 in hard costs, plus $600-1800 in federal income taxes (depending on tax bracket). The best news: after age 65, that HSA money can be withdrawn penalty-free (though subject to income taxes, just like an IRA) to fund my retirement.

About prepaying your healthcare costs: A claim typically costs an insurance company $50 to process, regardless of the amount of the claim. This is $50 they are charging you (in your premiums) to pay the doctor on your behalf.

If you still think this is a good deal, ask yourself how much you'd pay someone to pay your other bills for you. Would you pay me $50 PER BILL to pay your water bill, your trash bill, your cable/satellite TV bill, your internet bill, your phone bill, your electric/gas/oil bill, your other insurance bills (home/renters,car), your mortgage/rent, and your credit card bills? How about $10 per bill? Or $5 per bill?

Wake up, America! Take some personal responsibility for your healthcare costs. Don't pay the middleman more than you should, for costs you won't recoup - pay yourself (HSA) instead.

Guest's picture
Guest

I found this really great video on you tube about high deductible health plan and thought your readers may benefit. the link is posted below. And thank you for all the info.

http://www.youtube.com/watch?v=CzTmC-m2bII
medical travel plan

Guest's picture
Guest

The thread that runs through it all is bottom line. IF you don't want insurance that you pay more in than you get out, then for most folks this isn't going to happen. Insurance companies as a rule pay out roughly 75 cents for every police dollar that comes in. The best way to minimize your costs is to do the arithmetic. If you have a 5000.00 deductible with 100% paid after that and pay 400 a month for it that is 9800 a year (potential) with a guaranteed outgo 4800.00 a year. But if you take a no deductible with with a 20 dollar copay that cost 1400 a month your guaranteed outgo is 16800.00 a year. The thing you have to do is add it up,make sure you policy has a maximum out of pocket and I would recommend finding a Insurance person that you trust,any sales person should take the time to go through the policy and help you determine what you need if they don't then call someone else.Don't get in a hurry.

Guest's picture

Though most people today have, some type of medical insurance coverage through their employer the risk of losing the employer insurance plan is greater than if you had a health insurance plan independent of whatever company your are employed. One of the more attractive benefits is that whether you stay employed at your current place of employment or transfer to another for higher pay and stability your health insurance plan remains with you.

Of course, this is a very costly adventure in most cases, but there are some who are able to absorb the cost long-term. The key to success is for you to do your homework and shop around. It takes time to gather information about health insurance through booklets, pamphlets and at times a walk in appointment, but in the end, it may be your most attractive alternative.

Depending on your health, that of your family members and your financial status you might consider researching the Health Savings Account (HSA) because this will afford you a little more freedom and choice over the other more traditional health plans. The Health Savings Account is far from an affordable health insurance plan when you are first setting it up though as it requires an initial deposit of about five thousand dollars to be placed in the account up front.

Guest's picture
Eric

I don't understand your point. If your paying 50-100 dollars for a high deductible plan that doesnt cover anything before your deductible, and you never meet your deductible, then how is saving 40-60% through "price negotiation" saving you money? Your still paying 50-100 dollars or more a month, so by the time you do go to the doctor you've paid that 40-60% off in insurance premiums.

Does anyone else see what I mean?

Linsey Knerl's picture

Your mileage will vary with a plan like this, but let me try to explain. 

If a woman under my plans gets extensive blood work done, or in the case of a friend of mine, an ultrasound for a breast lump, it could cost upwards of $800 in total costs for the tests and the technician fees (plus the cost for the doctor to sign off on the slides.)  The insurance in this case was able to negotiate the total cost down to well below $200.  That's a savings of $600 for one day at the clinic.  Yes, you would have to pay the full $200 because of the $5K deductible and insurance not "paying" until after it's been met, but the $600 savings is yours right away.  Assuming that you don't have anything else done for the rest of the year, the amount saved is equivilent to roughly 6-7 months of premiums.  Meaning, you're only "out" for the remaining 3 months of premiums this year in a static profit/loss sense.

But the odds are good that you will need to be seen again before the year is out.  And even if you just break even for the year, you're still saving over the cost of not being insured as far as a cash flow scheme is concerned.  (If you don't have insurance, you often have to pre-pay for services, whereas if you're covered, you can wait the 2 months or so for your claim to be filed, negotiated, and lowered -- giving you an additional 2 months to prepare for a large bill.)

Hope this helps!

Linsey Knerl

Guest's picture
Guest

Thanks a lot Linsey, that really did help me to understand.  I guess the reason I don't like the idea of it is because I'm a young and dumb kid.  I go to the doctor about once every two years, and it rarely costs me over 200 dollars.  I don't know if that's because I just brush a lot of things off and "Deal" with them unlike a lot of people, or if I'm just naturally healthy.  Only time will tell.

Thanks again,

Eric

Guest's picture
Guest

This certainly seems to make sense.

However, I guess I just have a hard time believing, even though doctors like making money just as much the rest of us, that they would look at a person without insurance, who they know is struggling to makes ends meet, and simply say, "If you were a multi-billion dollar insurance company, I'd gladly cut down my fee down to 1/4 the cost, but for you, I'm going to charge full price."

Surely, you could ask them for the insurance rate. If they knew you weren't someone without much money, they'd have to be fairly unscrupulous to charge you 4x what someone with insurance would pay.

Guest's picture

Great article,
It is very important for everyone to have health insurance.If you don't have insurance and you have to go to hospital, you'll have to pay over $20,000.That happened to a friend of mine.I know a site that offer the cheapest possible price for health insurance, free quotes and a lot of benefits.

http://www.NationalHealthInsurance.info

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Rosana Simson

Great information,

It is easy to find a lot of health insurance companies online.What is not easy is to find genuine health insurance company.They are reputable companies that offer many insurances and all of them are with free quotes.There you can find the cheapest price because they are not middleman, like 99% of the online sites that offer health insurances.A friend of mine told about such a company.I thought it will be helpful for every one to share it here.

http://MyBestHealthInsurance.Info

Guest's picture
Tom

I am considering leaving my group plan through my employer and striking out on my own. How has it been using single coverage? I've heard horror stories about claims being denied, etc. Is there any truth to this? Also, how much have rates increased each year? It's getting out of hand with our group plan...

TIA!

Tom

Guest's picture
Karen Shirron

Sounds like what I am looking for! Can you tell me the name of your plan or recommend a reputable company for high deductible insurance?

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Guest

Our family has a high deductible insurance plan and we use an HSA. Recently my daughter came down with pink eye (really not a medical catastrophe) which needed to be treated. I knew that an office visit to her pediatrician would be about $120 so I decided to try a walk in clinic that boasts $49 office visits. I went in and explained my daughter's situation to the receptionist. She agreed that my daughter needed to be seen by the doctor and by the way did I have insurance. When I told her that we had high deductible ins. she said that she was required by law to bill our ins. and therefore the office visit charge was $160. So basically if I had lied about having the high ded. ins. or if I was irresponsible and just didn't bother to have ins. I would have saved over $100. Any comments or suggestions for getting an inexpensive office visit for simple problems like pink eye? Thanks, Betsy (North Idaho)

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jeffjs

You forgot one VERY important issue. Let's say you have a $5000 deductible, and god forbid, you have a bleeding ulcer and have to go to the hospital to get it repaired. You get surgery. The drawback, in 30 days, you will have to come up with $5,000. You could call the hospital and get payment terms, but then you will have to pay your monthly insurance premium and the monthly hospital bill. Unless you are rich enough to pay the hospital bill off in 12 months (at $400 a month in addition to your premiums), you will probably be paying it for a couple of years. If you have an second ulcer in the next year, you will probably be filing for bankruptcy. The hospital bill plus your premiums would make your company plan at $1400 start looking good. The best time to get a high deductible plan is when you are young 20-30 and are working and making a good living (say as a contractor on a 1099) and single. For most families it is a bad option especially because most deductibles are per individual so a family of 3 could actually have a $15,000 deductible when you add them together.

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Guest

Hmmm. I just read all these comments, and I'm not sure anybody put it in the simple terms that my family used in making our decision to have a high-deductible plan: If you have your out-of-pocket maximum amount in your bank account (HSA or otherwise), then a high-deductible plan is a good idea. In a year when you don't require much health care, you save oodles of money because of lower premiums; if you have a bad health year, you know how much you might get hit with, and you know it's not going to put you in the hole because you have it in savings.

If you don't have your out-of-pocket maximum in the bank, it's risky to sign up for a high-deductible plan, obviously. You cannot predict when illness or an accident might strike.

That's all -- sadly, the most affordable insurance option is, in my view, only really feasible for someone who has savings.

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Jim

Nice article. We are wrestling with this issue now

Guest's picture
Diane

I am a nurse working for a large medical corporation. This year we are being offered two plans - one is Humana Coverage First with annual deductibles of $5,000 (family) but excludes co-payments and has a benefit allowance of $500 (does not apply to co-pays). The yearly premium is $3,510 for my husband and I. We also have a HSA option which is a PPO with a $5,000 in-network family deductible with no co-pays and preventative services are covered at 100%. The cost of this plan is $1,378 per year for my husband and I and we can put up to $7,250 in the HSA account because we are both over the age of 55. In the past I have always taken the Humana Coverage First insurance plan and put $2,500 into a flexible spending account because I have to have a PET scan annually due to melanoma 5 years ago which costs $2,500. I am unsure because I don't know if the deductible is per person or combined??? This HSA plan is almost $2,000 cheaper in premium. I would appreciate some input to help make this decision. Thank you!

Linsey Knerl's picture

Diane,

You will need to ask about the combined deductible. Our plan requires $2500 for me and $2500 for my husband, but only pays out after $5000 has been met. In other words, there is a "family deductible" which is the combined cost of the both of us. If my husband incurs $5,000 in costs, for example, it will start paying right after that (regardless of the fact that I incurred no costs.) Plan terms vary, so check with your insurance company before signing up.