high deductible plans

Posts Tagged: high deductible plans

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5 Ways to Better Manage a High Deductible

So you’ve got a health plan with a (gulp) high deductible. That’s pretty common these days, so you’re not alone. In fact, a good chunk of the plans sold on the insurance exchanges are high deductible health plans (HDHPs).

High deductible plans are great because they cost less when it comes to the monthly premium. But you need to be prepared for when, or if, the bills start coming in.

Here are five things you can do now to make managing your deductible easier.

1)  Save save save

One of the worst things you can do if you have a HDHP is to go without savings sufficient to cover your deductible. This is why all HDHPs come paired with a Health Savings Account option. HSAs let you save money tax-free. If you’re going to save for medical expenses anyway, why not get a break on taxes too? If your health plan is through your employer, they may already be making contributions to your HSA. In addition, you might also consider putting in your  own monthly contribution, as most employers only contribute enough to fund the full deductible over the course of an entire year. If you want the savings to build up faster, you’ll need to kick in some funds yourself.

2) Know what’s excluded

Because of the Affordable Care Act, all health plans must provide preventive care free of cost. That means these services won’t count towards your deductible. It’s also common for plans to exclude certain co-pays or have a separate deductible for prescription drugs or for out-of-network providers. What you don’t want is to be in a situation where you thought you were fulfilling your deductible when you uhh, really weren’t.

3) Understand family deductibles

Do you have your spouse or children on your health plan? Each member of the family may have a separate deductible. To make things more confusing, there are no standard rules for how plans calculate these. Each individual member may just need to meet their deductible separately. Or it may be the case that one member of the family must meet the entire family deductible for coverage for everyone to start. Check with your health plan if you’re unsure.

4) Know the plan year

Most plans use the calendar year (January to January) for resetting deductibles. However some use a fiscal or academic year. Also keep in mind that the deductible year could be different from the rollover period for FSAs or HRAs for your plan.

5) Reevaluate if needed

HDHPs tend to work best for people who either don’t use a lot of health care or who, if they are sick, have a lot saved up. If you anticipate a lot of expenses year after year, you may find a lower deductible plan works better. Don’t be afraid to switch plans at your next opportunity if this feels like you–remember, you won’t lose any money left in your HSA if you choose to do this. HSA funds belong to you once they are in your account, regardless of if you change plans or employers.

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In with the New, Out with the Old: A Quick Comparison of 2013 & 2014’s Health Plan Costs

It’s time to say good-bye to 2013’s insurance and hello to 2014.

How did you fare in 2013? Some new research from eHealth looked at the average amount that Americans paid towards health insurance this last year. We tried to compare this to the plans available in the insurance exchanges for 2014.

According to eHealth, in 2013, the average individual premium was $197 for a basic plan, and $247 for a comprehensive plan.

And the average annual deductible for an individual was $3,319.

 

So can you expect to do better or worse in 2014?

There aren’t a lot of solid numbers on the 2014 plans being offered on the exchanges. But even if there were, there are a couple things to keep in mind: For one thing, the plans being sold on the exchanges are generally better than those that were sold up until now: they must meet some minimum standards by covering a set of basic Essential Health Benefits. In addition, many people will be eligible for a tax subsidy, which will help offset their premium (you can calculate your subsidy here).

Some research found that the average premium for a health exchange plan is $328. But that doesn’t really tell us much when it’s averaged across all plans, in all geographies, and for all ages.

For example, for a 27-year-old, that plan would be $163 for a basic Bronze plan or $240 for more comprehensive Silver plan.

And across all states, the average premium for a pretty comprehensive Silver plan ranges from $192 to $516.

When it comes to deductibles, the plans on the exchanges range from an average deductible of $4,300 (for a Bronze plan) to $2,500 (for a Silver plan). Or if you wanted to get the best of plans (Platinum) your deductible could be as low as $167.

 

Well, that’s a lot of numbers. So what’s the moral for 2014?

We’d probably sum it up to say that some people may end up with more costly insurance. But most of them will probably enjoy having better coverage or even getting a subsidy on their premium. And either way, you’re likely to be amongst the crowd that has a high-deductible plan – this seems like a trend that isn’t going away soon.

Let us know how your 2014 is shaping up – and how Simplee can help you manage your costs in the New Year!

 

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What does “Deductible Waived” on Co-Pays Mean (And Is It a Good Thing)?

When you see what your health plan’s co-pays are, it’s easy to tell how much you’d pay for a doctor’s visit, lab test, or x-ray. But what does it mean when the “Deductible is Waived” for the co-pay? And will this cost you more or less in the end?

Normally, you are responsible for paying your full deductible before your insurance pays anything towards your health care. However, some plans will waive the deductible for certain services, usually office visits or emergency care if you’re admitted to a hospital.

Let’s say your co-pay for a doctor’s visit is $25 and your deductible is $1,500. If the doctor charges $200 for a visit, you would normally pay the $200 yourself and it would be applied to your deductible. If the co-pay is waived, you’ll just pay $25.

Sounds like a good deal right?

Maybe, maybe not. Waived co-pays can be a great deal if you are pretty healthy and do not expect to meet your deductible. They’ll allow you to skip over paying the full charge and only be responsible for the co-pay. They can also save you a lot of money if you are ever admitted to a hospital from the emergency department.

But if you would meet your deductible anyway, this feature doesn’t really save you money in the end. It might actually drag out how long it would take you to meet your deductible, just shifting the out-of-pocket cost to other services. Or even worse, some plans will not apply that $25 co-pay you just paid to your deductible, so you won’t get credit for the money you just spent.

And keep in mind that many preventive care benefits are 100% covered anyway, regardless of whether you met your deductible.

So your best bet? Enjoy the waiver benefit if you have it. But be wary of paying a higher premium for the feature if you use a lot of health services–it might not be worth the cost. And always check on exactly what costs are applied to your deductible if you expect to meet it!

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How to Start a New Health Plan Off on the Right Foot

Welcome to a new year, with new health benefits. You just chose a new health plan and now it’s in full effect. But most people don’t have a full understanding of how their benefits work. This means that many of them end up losing money in their spending accounts, paying more for care, or getting claims denied.

Follow these tips to make sure you start off 2013 right.

Plan for your Deductible
Guess what–deductibles have gone through the roof over the years, so that often means more cash out of your pocket. If you are one of the 65% of people who have a high deductible health plan, it’s especially important for you to plan your spending. High deductible health plans (HDHPs) come paired with Health Savings Accounts (HSAs), or accounts where you can save money just for medical expenses free from taxes. To be best prepared, you should plan to save at least the amount of your deductible in your HSA as soon as possible.

Network It
Most health plans have some restrictions on what providers you can see or they cover much more on visits to in-network providers. Find out the type of plan you have and whether you have a provider network. HMO plans are the most restrictive–don’t even think about going to a non-network provider unless you want to pay the full cost. PPOs have some more flexibility, but services in-network will be less expensive. POS plans give you more freedom, but often involve more paperwork for out-of-network visits. And finally, FFS plans allow you go to any provider you want, but few companies offer this option anymore.

Get Spent
Did you sign up for an FSA or HRA? Don’t forget about the money in your account. These funds disappear if you do not spend it by the end of the year. Do some planning now by finding what eligible expenses you expect this year so that when they come up, you’ll know to pay with your FSA or HRA, insteading of other funds. If you have an HSA, the same “Use it or lose it” rule does not apply. Your savings will roll into the next year.

Practice Prevention
All health plans must cover a list of dozens of preventive care services, all free of cost. Get your money’s worth by checking out the list and asking your physician what they recommend. Even if you have a high deductible plan and you have not met your deductible, you can still get these services completely covered, as long as you don’t have a pre-existing condition that already required one of these tests or screenings. Learn more about preventive care here.

Have a Non-Emergency Plan

What do you do on the weekend or in the middle of the night when you’re not sure if a medical condition is serious enough for the ER or can wait for a doctor’s appointment?  Most health plans have a variety of options for these uncertain situations such as nurse advice lines or extended-hours urgent care. Know your options so that if you’re caught in the situation, you can choose to avoid an expensive ER visit. Of course, always go to the ER if you are having a life-threatening emergency.

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5 Mistakes To Avoid During Open Enrollment

 This post originally appeared on the Mint.com blog. 

The last few months of the year usually mean time to think about choosing new health benefits. Some people think about Open Enrollment as an opportunity—it’s your chance to switch plans! But for most, it’s a looming headache: time to stress about choosing the right benefits.

It could be that there are just so many more options today than ever before. Several years ago, most employers just gave you a choice between a low-cost HMO and a more expensive PPO. Now the options have multiplied into an extended family of acronyms. To make things worse, employers and health insurance companies are pushing more costs onto consumers, so it’s even more important to make sure you’re getting your money’s worth.

As you approach your Open Enrollment period, here are 5 common mistakes, and how to avoid them.

1)   Doing nothing

Almost 9 out of 10 of us just keep the same benefits we had last year. That’s not necessarily a problem, especially if you’ve done your research and your needs haven’t changed. Just make sure nothing substantial has changed about the plan either. Sometimes premiums increase or  benefits get cut, and over time, the plan that was once a good deal may not be the best one for you anymore.

2)   Shopping only by the premium

It’s easy to focus on how much health insurance will cost you each month because it’s a clear, predictable expense. But don’t overlook what you’re paying for or you may find yourself facing big costs later on, such as high deductibles or co-insurance.

3)   Over-insuring

It’s possible to have more insurance than you need. While good-for-you from a health perspective, this might not be that great from a financial perspective.

This doesn’t necessarily mean choosing the cheapest plan if you are a healthy individual—because we are all at risk for those unexpected medical events. But it might mean choosing a plan that has a more limited network, like an HMO if you are not seeing any specialists. Or choosing a high-deductible plan if most of your visits are routine preventive care.

4)   Under-insuring 

Of course, you don’t want to go too far in the other direction choosing too minimal of a plan either. If you choose a high deductible plan, you should be able to pay the deductible at any time if needed. In an ideal world, you’d have lots of time to save up cash to cover your deductible in an HSA linked to the plan. But if you enroll in a high deductible plan, and suddenly have some medical bills before you’ve accumulated enough in your HSA, you could be in trouble.

5)   Ignoring the savings accounts

FSAs (Flexible spending accounts) and HRAs (Health reimbursement accounts) pretty much mean free money on the table. But there are estimates that as few as 20% of people set up an FSA when it’s offered.

If you’re turned off by the idea of keeping receipts and faxing photocopies, give these savings accounts another chance. Now, most issue debit-like cards and many merchants are set up to automatically recognize FSA or HRA eligible expenses—so you can spend easily. You should still keep receipts as proof, and you might still need them for certain expenses. But the tax savings are well worth the work.

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Why Understanding Your Health Plan Just Got a Bit Easier

Wouldn’t it be great if overnight, understanding health insurance magically became easier?

That was the aim September 23, 2012, but whether it actually happened is still in question.

On the 23rd, a new benefit from Health Reform kicked in, aimed at making it easier for consumers to understand insurance and compare plans.

It’s called the Uniform Summary of Benefits and Coverage (SBC). Right now, health plans already send you long, complicated SBCs. But the problem is, every one is different (ever tried to compare two of these?).

But now, every plan will be required to present their information in a standardized way, using the same definitions, so you can compare apples to apples.

Think of nutrition labeling—we can see instantly exactly how much more sodium is in one bag of chips versus another. That’s the goal behind the Uniform SBCs. And the “labels” actually don’t look that different from what’s on your food…

Even better, the new document also include “coverage examples,” or a theoretical breakdown of costs for some common medical conditions. See example SBCs here.

It’s a step forward, but here at Simplee, we know it’s not enough to make shopping for health insurance as easy as shopping for sweet potato chips. For example, it’s still difficult to compare 70% and 80% co-insurance when you don’t know the full cost of a service.

Basically, the new SBC will make is easier for consumers to choose between health plans, but after that, it’s still a challenge to understand claims and bills once you start using the plan.

Everyone with a private health plan will see this benefit. Look for it when you receive your plan documents each year or on your health plan’s website.

 

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How to Choose the Cheapest Health Plan that Still Meets your Needs

This post appeared earlier on Mint.com. 

Maybe it’s Open Enrollment time or maybe you’re starting a new job that offers health benefits.  What’s the key behind all the terms – HMO, PPO, HDHP—and what can they tell you about how much that plan will really cost you?

The two most common terms, HMO and PPO, have to do with physician choice. And a HDHP is about the deductibles. As a general rule? HMOs will offer greater savings than PPOs, but at the cost of less choice and control. And HDHPs can save you even more money if you are healthy and don’t get frequent medical care.

So which plan fits you?

People with an HMO

  • Pay lower monthly premiums
  • Have to go through a primary care physician for everything
  • Have to get a referral for specialty care

People with a PPO

  • Pay higher monthly premiums
  • Can generally go directly to specialists
  • Will usually pay more for specialty care when they do get it

People with a HDHP (High deductible health plan)

  • Pay lower monthly premiums
  • Have a high deductible—you’ll be responsible for at least $1,200 out-of-pocket before your plan pays anything
  • Can open an HSA (health savings account) to save money specifically for health care costs with big tax advantages
  • Are usually younger and healthier

Some things are consistent across HMOs and PPOs – both have to cover preventive care at no cost to you (and that’s even if it’s an HDHP, and you haven’t met the deductible yet!), emergency care at out-of-network hospitals at the same level of coverage as in-network hospitals, and both have the same annual and lifetime out-of-pocket maximums.

Prescription coverage will vary by the plan.

If you’re overwhelmed about choosing the best plan for you, try focusing on two things: Physician choice and how often you need health care. Are willing to pay more to get easier access to specialty care when you want it? And are you willing to chance having to pay a higher deductible to have lower monthly premiums?

For many people, simplifying it to these two preferences will help lead you to the right plan.

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Do you Need Supplemental Health Coverage?

With more and more people signing up for high deductible health plans, supplemental health policies have also become more popular. According to America’s Health Insurance Plans, high deductible health plan enrollment has grown by over 18% since 2011. Since these plans have deductibles of anywhere from $1,200 to $8,000, a supplemental policy to pad your plan can look very tempting.

Supplemental plans can either help pay your deductible and out-of-pocket costs, or they can pay out a lump sum of money either at one time or each day that you qualify for benefits.

The plans can be pretty inexpensive—as low as $12 a month for an individual and $20 to $30 a month for a family. But the benefits can vary drastically so make sure you know what you’re buying.

Considering supplemental health coverage? Ask these questions.

How much would an emergency would cost you?

Add up your deductible and the out-of-pocket you would owe for a few days in the hospital. Of course, you can’t be sure without knowing the actual costs, unless your plan has only fixed co-pays. But you can estimate: assume any major event would cost well over $10,000—how much would your co-insurance be?

Getting a rough idea will help you understand how useful a supplement might be.

Would you have other (non-medical) costs?

In an emergency, you might find yourself with other financial hardships such as lost wages, living expenses, or transportation costs. A supplemental policy can cover these expenses. Usually, the plan pays you a cash sum and you can decide how to spend it. One advantage of this type of policy is that it can help cover expenses that are not HSA-eligible.

What are the plan’s benefits?

Will the benefits cover enough of your likely costs to be worth it? A typical accident or injury plan may pay out $250 for each day you’re in the hospital, while a critical illness policy will pay a lump sum if you are diagnosed with cancer or have a stroke. If your day to day costs would far exceed the daily benefit, the policy is not worth the money.

How do you qualify for benefits?

It’s important to read the fine print here. A policy may only start paying benefits if an illness or injury reaches a certain degree of severity or may limit the days of benefits it pays. It may also pay much lower benefits for more common diseases—the times your most likely to need it. For example, one consumer was told his policy would pay $5,000 for cancer, but in reality, the $5,000 was only for internal cancer (breast or lung) and skin cancer was paid at $100.

The bottom line is, weigh the costs and benefits of supplemental health insurance carefully. If you have a typical health plan, you probably do not need an additional policy. But if you have a very skimpy or high deductible plan, you’re more likely to find a supplement to be helpful.

And most importantly, remember that these plans are meant to be what the name suggests—a supplement—and not a replacement for full health insurance.

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How Does Your HSA Compare?

Wondering how your HSA stacks up compared to others?

Are you saving enough or spending too much?

We decided to look at Simplee users as a group to see. As of the end of June 2012, the average Simplee member had $1654 in their HSA. This was up from $1385 at the beginning of the year, but not quite as high as the average of $2235 the previous fall. That seems to suggest many people are saving up as the year goes on and then paying out their deductible by the end of the year.

The good news? Most consumers seem to be saving more than they’re spending. For the first half of 2012, Simplee users contributed an average of $2289 each quarter to their HSA and only distributed $1903 per quarter.

So how much should you have in your HSA? Well, just like any savings account, the more the better—but of course, within reason. You obviously don’t want to tuck away so much money that you can’t afford your other bills. But at the very least, you want to have enough to cover your deductible.

The average American has $1490 in their HSA (as of 2011, according to the Employee Benefits Research Institute), so it looks like Simplee users are doing a bit better than average. Way to go!

To track your HSA transactions and manage your expenses easily, log in to Simplee.

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Health Savings Plans: Making Sense of HSAs, HRAs, and FSAs

This post also ran on the Mint.com blog.

Did you eyes glaze over a little when you read that headline?  Well, sign up for a health care plan these days, individual or employer-sponsored, and that is the kind of alphabet soup you might have to wade through. More and more companies are looking to cut costs by offering high-deductible health plans (HDHP), also known in the industry as consumer-driven health plans (CDHP).  These plans feature lower premiums in exchange for a higher deductible—the part of care you pay for out of pocket before insurance kicks in.  They are often paired with some sort of savings account that allows you or your employer to set aside money to cover your expenses.

These savings plans can make a lot of sense from a tax-savings standpoint.  Funds can be set aside pre-tax or, if they are contributed later, deducted from taxes, so in effect any time you use the money to pay for your medical costs it is like you are getting a discount equivalent to your tax level.  That’s why it could be a smart move to set one up even if your employer doesn’t offer it as a benefit.

So which plan makes sense for you (if you have a choice)?  Let’s decode some of the TLA (three-letter acronyms):

HSA: Health Savings Account

Health savings accounts (HSAs) are a popular employee benefit: over 40% of companies offered an HSA in 2011, with 12% more expected to do so in 2012.

How it works: HSAs allow you to set a portion of each paycheck aside into an account that accrues interest like an IRA.  Employers or other people can also contribute to the account.

Who can have an HSA: Only people covered by a high-deductible health insurance plan, defined as a deductible of $1,200 for a family or $2,400 for a family.  If your employer doesn’t offer an HSA you can open one up on your own, so these are ideal for the self-employed.

What it covers: Qualifying medical expenses such as deductibles and co-payments.

Carry-over and portability: You own the funds that go into an HSA, and anything that you don’t use carries over from year to year.  If you leave your job you can take the funds with you.

HRA: Health reimbursement account

While an HSA is like an IRA in that it’s an investment owned by an individual, a health reimbursement account (HRA) is a benefit offered by an employer that ends when the employment does.

How it works: Only employers may offer HRAs, and only they may put money into it.  The money is not considered income, which means that it is not subject to income or payroll taxes.

Who can have an HRA: An HRA can be used with any kind of health plan.  You cannot open up an HRA on your own.

What it covers: An HRA is the only type of plan that can be used to pay insurance premiums as well as medical expenses.

Carry-over and portability: The funds in your HRA belong to your employer, and when you leave your job any funds in the account stay with them.  Your funds might roll over year-to-year or they might not; that is up the employer.

FSA: Flexible savings account

Flexible savings accounts are like HRAs in that they are employee benefits, and employees can only use the funds as long as they are employed.

How it works: Unlike an HRA where employers fund the account, with an FSA the employee funds the account with a portion of each paycheck.  The money is set aside pre-tax so you get tax savings, but it does not accrue interest.

Who can have an FSA: An FSA can be used with any kind of health plan, but you cannot open up an FSA on your own.

What it covers: An FSA may only be used on qualified medical or dental expenses (not premiums).  As of 2011 you cannot use FSA funds on OTC medicines without a doctor’s prescription.  In 2013, there will be a cap of $2,500 on the total funds in an FSA.

Carry-over and portability: An FSA is a “use it or lose it” plan; any unused funds in the account at the plan’s year-end are forfeited back to your company.  You also lose access to the funds at the end of your employment.

You may even come across a couple of other options, such as an HIA (health incentive account) or an RRA (retirement reimbursement account).  Whatever you encounter, just look at how the plan gets funded, what it covers, and whether you get to roll over or keep the funds.  Track deposits and expenditures carefully, keep receipts for tax purposes, and enjoy your savings!

 

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