The deductible problem


#1

WRITTEN BY: Todd Boudreaux

Deductibles and premiums

In a health insurance plan, the deductible is the amount paid out of pocket by the policyholder before insurance coverage kicks in. The premium is the monthly cost paid to the health insurance provider, and does not count towards your deductible. Plans with higher deductibles typically have lower premiums, and vice versa. Over the past two decades, deductibles have been steadily rising and a greater percentage of Americans have been enrolling in high deductible health plans.

What counts towards your deductible?

The services covered by your deductible vary by health plan. Most health insurance plans cover preventative services at no cost to the policyholder. Preventative services include annual checkups, screenings, immunizations, counseling, and more. For some health insurance plans, costs associated with everything other than preventative services goes towards your deductible. Other plans exempt some services from the deductible — usually services that require copayments such as doctor visits. Some deductibles cover the cost of prescription medicine, and some plans have a separate deductible just for prescriptions.

What is a high deductible health plan?

The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. High deductible health plans (HDHPs) typically have lower premiums, and thus can be the most affordable for people looking for a cheaper option for health insurance. Out-of-pocket expenses are limited to a maximum of $6,650 for an individual and $13,300 for a family with an HDHP. High deductible plans are a form of catastrophic coverage, intended to cover only catastrophic illnesses, rather than constant visits to the doctor or prescription refills. As a way to offset the cost of an HDHP, a consumer may contribute to a Health Savings Account (HSA) which allows them to set aside pre-tax income that can be spent on health care.

Worth the risk?

The percentage of workers enrolled in HDHPs has been steadily rising since 2004, when only four percent of workers took advantage of these types of plans. In 2016, the number had risen to 29 percent. A recent study from USC found that individuals enrolled in HDHPs were at a significantly increased risk of financial trouble, especially those who are low-income or living with a chronic illness1. In 2015, one in five workers had a deductible of $2,000 or more. Advocates for HDHPs say that when consumers have to front the costs themselves, they are more likely to take care of themselves and avoid unnecessary medical procedures and trips to the doctor.

There are several problems with the assumption that consumers with high deductibles will be more discriminant in their healthcare decisions. When the upfront costs are high, people may avoid seeking treatment for healthcare issues until they become emergencies. 43 percent of insured patients said they delayed or skipped physician-recommended tests or treatment because of high associated costs. Doctors have even reported cancer patients giving up life-saving treatment at the end of a calendar year because they could not afford to pay their deductible which would reset in January.

High deductibles and diabetes

For people living with diabetes, high medical costs are a fact of life. With insurance, people with T1D will spend on average over $10,000 a year managing their condition2. And without insurance, the costs for someone with diabetes can reach as high as $45,000 per year3. If you have a high deductible and diabetes, maxing out your deductible is inevitable. If you have a chronic condition, choosing a plan with a low deductible is almost always the best way to go. It is important to check with your insurance company before signing up to see if your current medications and devices are covered. If you have a certain pump, CGM, or brand of insulin that you are using and do not want to switch, you may need to stay with your current insurance company.

  1. https://ajmc.s3.amazonaws.com/_media/_pdf/AJMC_04_2018_Zhang%20final.pdf
  2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2901386/
  3. https://www.thediabetescouncil.com/the-cost-of-having-a-child-with-diabetes/

#2

LOL. Near the end of the article is the sentence that I was waiting to see.


#3

Right? And as many people’s insurance is obtained through their employer sponsored plan there is little choice in the matter.

My previous employer had a high deductible option and a higher deductible option to choose from. The premium savings was $25 every two weeks.

I opted for the high deductible option for my family. My deductible was $3,100 before anything other than an annual visit was covered. This included prescription coverage. January and February sucked because $0 of my $1500 drug regimen was covered. After that the copay/coinsurance was 20%. So…$6,500 in premiums, $3,100 in deductibles, $3,000 in rx copays, $500 in lab coinsurance, $150 in doctor’s visit copays. Total for the year was $13,250.

When my current job became available I took a $10,000 pay cut because the insurance is so great. $6,000 in premiums, $0 deductibles, $80 in doctor’s visit copays, $0 lab fees, $610.64 in rx copays. I also got a CGM and 90 day supply in the 4th quarter for $250. Total for last year was $6,940, almost a 50% savings.

Add in better health and being able to sleep at night not worrying about getting your meds, labs, or seeing the doctor is priceless.

The US health care system is irretrievably broken. Healthcare is a human right.


#4

Doesn’t “irretrievably broken” mean it can never be fixed? I don’t like predicting the future. We’ll see what happens. I make no prognostications. I just go with the flow–deal with stuff as it occurs.


#5

We’ve had a high deductible insurance policy for several years. For people like us who are older and have some savings it can be a good option. We will hit the deductible limit each year. One thing that is a nice surprise is that my insulin only has a $10 monthly copay, from Day 1 of each year. Maybe because it is maintenance medicine? Or because it is used in a pump? I don’t complain. One thing that helps: next year, when it is open enrollment, take all of your last year’s charges. Every visit, every med, every procedure. You can find the costs in your EOB’s (Explanation of Benefits) Then assume that is what you’ll have next year, and run it through your different plan options. Compare deductibles, copays, premiums and other costs. It’s a ton of work, but the results may surprise you.


#6

Put it in a spread sheet and save the spread sheet for next year when open enrollment comes around. That way you have a laundry list of all the expenses to start from and saves a lot of time the second time, and beyond, going through that process.


#7

One of the biggest is that there is no open, realistic price list for procedures, equipment and medications. It’s hard to be “more discriminant” in my healthcare decisions when I have little ability to know what my costs will be from one year to the next.


#8

I don’t necessarily agree with the author. High deductible health plans offer other distinct benefits as well. Eg the ability to contribute to HSAs is dependant upon the plan being deemed “high deductible” and many of the expenses incurred due to diabetes may not be subject to the high deductible.

I recently went through this topic with a fine toothed comb when my wife accepted a new job and was given the option of the high deductible plan. I determined that in our case, the HD plan was far a far better option. Although ultimately we did not qualify for it because of the coverage that my job provides. However, we would switch to the high deductible plan at the first opportunity we could if my employer coverage ended.

My point is… do your homework. Don’t assume.


#9

Every plan is different, I think that’s what makes it hard for people to decide between coverage options.

I posted above about my experience with a high deductible plan offered by my previous employer. They offered a choice between two which had the exact same coverage with different copays. The small savings afforded by the higher deductible plan was eaten up by higher copays, at least for a person like me. I contributed to an HSA and the employer also made an annual contribution and offered a couple of incentives for additional contributions throughout the year. When I left I took the HSA with me and the balance was sufficient enough to pay for 11 months of copays on my much more robust health plan with my current employer. Sadly we only have an FSA at my currently employer, I wish FSAs would be replaced by HSAs for everyone.


#10

Another really important point on deductibles is the potential to have insulin excluded from your deductible. IOW, from day one of your coverage, insulin would be available to you at the plan’s discounted, post-deductible amount.

For me, this would have meant that in 2018, all my Novolog vials would have cost me $25/vial.

On the Federal level, this is one potential solution that the Diabetes Caucus is exploring.

You can check out if your Representative is a Diabetes Caucus member here: Join the Diabetes Caucus

If your representative is a member, this tool will let you say, “Thank You!” If not, this tool is an easy way to say, “This is an important, bipartisan caucus, please consider joining.”


#11

A woman who was lobbying for some other health-related bill told me the other day that for high expense conditions, you really need to read the fine print because its sneaky and high deductible plans are often less expensive in the long run. This surprised me. I’m not quite sure how I would verify that statement, but it made me question long standing beliefs.

Someone from one of the insurance companies told me that “low deductible” plans wont even exist in a few years. That was a few years ago that he said that.

I’m not sure how much I actually understand about health insurance. Sometimes I feel like its all gambling at the Casino. The Casino always wins.


#12

I try to resist getting wrapped around the axle on terms like “irretrievably broken”.

I think we can all agree that without significant changes from Pharma and PBMs/Insurers (all major PBMs are part of insurance companies now), people with chronic conditions and high deductible plans are in a difficult position that is way beyond just trying to manage the condition.

IMO this will require legislative and regulatory fixes to mandate change from each of the companies involved.

In order to get these fixes in place, we need to advocate and ensure that our legislators know there is a crisis now and an even bigger crisis coming.


#13

They are too busy fighting the other party to actually spend time legislating for the good of the country.


#14

I would agree that is likely a non-partisan and accurate statement.

POX on both parties.


#15

The message for us as advocates is this:

Don’t give up hope!

While it is true that there is extreme partisanship on virtually every issue, diabetes is not one of them. The Diabetes Caucus is one of the largest caucuses and it is NOT the Democratic Diabetes Caucus or the Republican Diabetes Caucus.

With the new Congress and lots of new members, we need to let them know how important this caucus is to getting real work done, that benefits real people in their districts. Every politician loves to be able to say, “I took “x” actions to benefit the people of my district/state.”

We can help lead them to water … with the understanding that party leadership may not allow them to drink.


#16

Sorry, I saw this and the first thing that came to mind was: “Until you kick them in the “a-hem” and knock them in…” (Chances are they swallow a little when they fall in).

(Don’t know why but my mind went with people at a mountain river crouching down to get a drink- or not as the case may be.)
:rofl::rofl: