High Deductible Health Insurance Plans Not for Everyone

February 2, 2010

High deductible health insurance plans have lower premiums, much higher deductibles, and are often tied into a Health Savings Account where you can accumulate money pre-tax year after year; as long as you don’t spend it all on health care costs.

Of course if you have very high medical costs and/or don’t put much money into a Health Savings Account then a high deductible health plan may not work in your favor.  A recent letter from our doctor’s office is a good example of this, stating that 25% of their patients using high deductible health insurance plans can’t/don’t pay their medical bills.

Dear Patient:

Over the last five years, many of our patients have changed their health insurance coverage to a high deductible health plan.  It may be a Preferred Provider Organization or a Health Savings Account.  Many of these plans no longer have a copay with an office visit. They either have a co-insurance of 20% of the cost or 100% of the cost of the office visit goes to the deductible until it is met.

Twenty-five per cent of our patients who have these plans are not able to pay for their services after the insurance processes the claim.  Because of this, our medical group has changed the financial policy regarding the care of patients with high deductible health plans.

At the time of service, if you have a high deductible health plan, you will be asked to pre-authorize payment on a credit card for the services you receive that day.  It will be a one-time charge to your credit card for those services only.   After the claim is processed by the insurance company and you are notified of the amount of payment, you will be given ten days notice to make other arrangements to pay your balance.  If we do not hear from you after 10 days, we will charge your credit card for the service.  We will destroy credit card information after the payment transaction is complete.

High deductible insurance plans may sound good during Open Enrollment when you’re eyeing the reductions in monthly premiums compared to regular insurance plans but they can be rather unpleasant when you have a several thousand dollar medical bill you have to pay because you haven’t met your high deductible yet.

If you save hundreds a month on insurance premiums with a high deductible insurance plan but end up having to pay interest on hundreds or thousands of dollars of medical costs you charge on credit cards then this type of plan doesn’t really make sense for you.

We’ve never been on a high deductible health plan, partly because my new employer doesn’t offer one and also because our kids delivery & care costs over the last 4 years would have eaten through any savings in premiums we would have realized.  Because I’ve never used one I don’t know how much education is offered to people signing up for a high deductible health plan but I hope that people are being informed of and considering the potential financial liabilities that come along with the plan.

Ben

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Ben

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn’t like the other kids… His addiction to personal finance has paid off for his family and now he’s helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.


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Comments

10 Responses to High Deductible Health Insurance Plans Not for Everyone

  • Edward

    Mary,

    I have to concur with your assessment. I used to loathe the idea of single payer, but being self-employed, the choices for health insurance are somewhat limited and on the brink of unaffordable, IF, you happen to become ill. So single payer, IMO, might not be worse.

    I can see this issue coming to a head in the coming years as more and more people are forced out of their employer’s plan and onto a government exchange. $3,000 for an ER visit. I can actually see that. That type of end result for the consumer is unsustainable in our economy. Fasten your seat belts we are in for a bumpy ride the next few years….

  • Mary

    We have had a high deductible family plan since June 2010. It has a $3000 deductible (in network) $6000 out of network and $500 per family (not per person)is put in HSA. All I can say is it’s horrible if you actually have any health needs. There is little way of knowing what anything costs til after the fact (UHC website is basically useless). An emergency trip to the ER for a disabled child where nothing was done other than blood pressure and listening to heart with stethoscope is costing us over $3000! It’s ridiculous. This is insurance for the insurer, they have nothing to lose and all to gain with these types of policies. I can see this will be the wave of the future. God help us all. Single payer looks damn good to me.

  • Dave

    My company offers a $2000.00 high deductible plan, they then give you a HSA card preloaded with $1000.00 to help cover the deductible. After you have met your deductible the insurance pays 100%, so the most I will ever be out of pocket is $1000.00. I am saving $60.00 a month ($720) to switch to this plan – I’m thinking it sounds pretty good.

  • Berteau

    Because you are spending more of our own money on health care with these increasingly popular consumer-driven health plans, you need a resource to find pricing for the tests and drugs that have been prescribed.

    How much am I going to have to pay for this test? Do I have a choice? Yes, you do and it turns out the cost can vary widely from facility to facility – you can compare prices on diagnostic tests and hospital procedures

    Some other tips to help you shop for healthcare:
    Check with your doctor and see where he/she has hospital privileges; you may have a choice of hospital to have your procedure done

    Ask if the hospital offers any types of discounts, and confirm any discounts in writing

    Quality rankings should drive your decision, but even lower-cost hospitals can provide high-quality care

    Ask if you can receive a discount for paying at time of test

    Ask your doctor if he/she gets a reduced rate at any facility

    Check out independent testing centers – their prices are often lower

  • Paula Jameson

    The best would mean that she wouldn’t get sick until she’d accumulated a tidy sum in her health savings account. That didn’t happen. And paying full price has been an eye-opener.

    Paula

  • Kevin@OutOfYourRut

    Ben, you’re making excellent points on the high deductibles. A high deductible is a bet that nothing will go wrong.

    If you’re young, single or a couple with no kids, the high deductible could work. But for a family or someone with recurring health issues it could backfire.

    A plan with a $10,000 deductible could have something close to the affect of being uninsured.

  • Erik

    I have a high-deductible plan for myself, and not my wife, with an HSA attached to it. I love the fact that I only pay $84 a month for the plan and then I choose what amount I put into the HSA every month, giving me more control over my health care. However, I definitely don’t have enough in the HSA to cover the full deductible, so I am taking small gamble if something major happens.

    When I go to the doctor for routine stuff, I always just have them run the claim through insurance so it gets applied to my deductible, and I pay the day that I am there with my HSA debit card. That way, they get paid right away, and I dont have to think about paying them over the phone or through the mail at a later date.

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