Ricky has spent the last eighteen months on a Bronze level plan he purchased for his family of four from the ACA Exchange. Fortunately for him, the enhanced premium subsidies had kept his health insurance premiums down while his policy has been in place. Given the average price for comprehensive coverage for a family of four, Ricky felt that the Bronze plan was the best option for his family budget. The potential downside showed itself during a recent trip to the Emergency Room for his teenage son who plays soccer.
Ricky's son Kent was injured during a hard slide tackle that actually broke his leg during his soccer match. There was nothing malicious with the tackle, but the damage was done. When Ricky and his son got to the ER, the doctors went to work doing a great job setting the bone and getting him on the path to recovery. But when Ricky got the bill and saw the health care costs before the deductible kicked in, he was stunned. When he was purchasing his policy, he didn't realize that his annual deductible for one family member was over $7,000! That meant he now had to figure out how to pay that amount before his health coverage would begin to cover anything.
Ricky's Situation: The Deductible is Too High
Having a high deductible on a health insurance plan can create a significant financial burden for individuals and families just like Ricky. The medical care and expenses associated with an ER visit can quickly add up leaving a normal family with some serious medical debt. As the bills trickled in, Ricky was left to struggle meeting both his monthly premiums AND the out-of-pocket costs from that night in the Emergency Room. Nevermind his other monthly costs.
With the increasing cost of medical services in Texas, the health insurance companies have been slowly raising the out of pocket costs for families like Ricky's. This move by the health insurance companies can prevent individuals from accessing necessary medical treatments and care when people begin to understand what their health costs will be for routine stuff. So why are the insurance companies making health insurance deductibles so high that it impacts the financial well being of families like Ricky's?
Understanding Deductibles in Health Insurance Plans
Health insurance deductibles play a role in determining how much you pay for medical expenses. A deductible is the amount you must pay out of your pocket for healthcare services before your insurance policy kicks in and starts covering your in network care. The purpose of a deductible is to shift some of the financial responsibility onto you, the policyholder. This makes sense until you begin to realize just how high the deductibles are for folks like Ricky on marketplace plans.
The practice of shifting those costs to you is to encourage people like Ricky to be mindful of their medical expenses. They want to discourage "frivolous" usage of your insurance. After you've met your deductible, your insurance plan starts covering a portion of your medical costs. The reason that we mention a portion is because they want to share costs with you until you hit what is known as the Out Of Pocket Maximum for your policy. Once you reach this limit, your insurance will pay for 100% of the covered services that are performed by in-network providers. Deductibles contribute towards the out-of-pocket maximum, as well as that sharing of expenses until your out of pocket maximum has been met.
Many Texans like Ricky don't completely understand how deductibles work and then get surprised by healthcare expenses as a result. Working with an experienced health insurance professional who can help you carefully review your plan and understand your deductibles, out-of-pocket maximums, and any other costs you may be responsible for is important. Most Texans only worry about their deductible unfortunately. But by considering all of these factors, you can effectively navigate your insurance coverage and mitigate the financial burden of medical expenses.
Reasons Why My Deductible is Too High
There are several potential reasons why your health insurance deductible may be too high. The type of plan and your health insurance company look at several factors to set the deductible amount. The first factor is the high cost of health care services. The cost of medical treatments, procedures, and prescription drugs has continued to skyrocket year over year with seemingly no end in sight. As those costs have grown, both the individual deductible and family deductible have increased in tandem.
A compounding factor is the lack of transparency in pricing which makes it difficult to anticipate and plan for medical expenses. When you get ready to buy anything outside of healthcare, you can easily comparison shop and evaluate price and value. Traditional health plans do not operate this way as the health systems negotiate everything in private with the insurance companies. Instability and unpredictability in the cost of health care spending has raised average deductibles in response.
In the end, individual coverage options and family plans have continued to see an increase in their deductible options unless you want to see your monthly premiums balloon to unreal amounts. Until health care costs begin to come down, or at least level off, we may not see much change in this trajectory.
Do All Types Of Health Plans Have Giant Deductibles?
When it comes to health plans, there is a wide range of deductible variations and out of pocket limits. Some people intentionally choose to go with those higher amounts, but many people looking for family coverage similar to Ricky's family of four are not excited about those large out of pocket limits. So what can a Texan family do?
First things first, not all health insurance plans in Texas have big, giant deductibles. If you are purchasing a plan on the Health Insurance Exchange it may feel like it, but there are plans that have some lower deductibles. Where the ACA plans get most folks is with the high maximum out of pocket values. The norm appears to be north of $9,000 for many of the plans that everyday Texans take a peek at. So let's break this down into two categories. The regular metal plans with Bronze, Silver, and Gold options have a wide range of deductibles and out of pocket maximums. The other alternative are high-deductible plans specifically designed to shift more costs over to Texans.
High Deductible Health Plans
High Deductible Health Plans are designed to offer more affordable monthly premiums, making them an attractive option for individuals looking to save on their health insurance costs. However, this comes with the trade-off of higher deductibles and out-of-pocket expenses. That subtle trade off of out of pocket medical costs for lower premiums can save or cost you thousands of dollars depending upon how your plan year goes. If you do not need much care, the premiums are lower and your medical spending stays down saving you thousands. But if you have an event like Ricky's son or a medical condition that requires treatment, the minimum deductibles on these health care plans will require you to spend thousands of dollars.
Lower Deductible Health Plans
On the other hand, low deductible health plans come with lower upfront costs for care provided as the deductible amount is lower and they usually have copays for regular services. This can be beneficial for individuals who anticipate needing frequent medical services for something like a chronic health condition. However, these plans have higher monthly premiums to compensate for the lower deductible and raise your total dollars spent for health care coverage and care received.
Ricky made a decision to purchase a Bronze level plan that had both a high deductible and out of pocket max. He chose not to work with an agent and then admitted after the ER trip that working with a local agent like Insurance For Texans could have led to different health care decisions upfront which would have changed his current health expenses drastically.
Balancing Medical Care Costs Versus Premium Costs
Ricky learned a very valuable lesson when looking for his current health insurance policy. The marketplace can be confusing and overwhelming with so many plan options available in Texas. This has led many to choose an individual plan that doesn't necessarily fit their family's lifestyle. They are left with large individual deductibles and maximum out of pocket expenses that makes their healthcare spending feel astronomical. How can he balance the monthly premiums against the insurance benefits?
General Out Of Pocket Expenses for Medical Care
When it comes to managing medical expenses, understanding the out-of-pocket costs associated with your health insurance plan is important. These costs can include deductibles, copayments, and coinsurance, which can vary depending on the type of health insurance plan you have.
The specific amount you are responsible for, whether it is deductible or other expenses, can vary depending on the services or treatments you receive. For instance, doctor visits or preventive care services may have a copayment, while medical treatments or hospital stays may result in higher costs due to cost sharing up the policy maximums. Copays generally do not count towards out of pocket maximums with most health insurers.
It's important to understand which medical expenses contribute to your max out-of-pocket and which ones do not. Costs like doctor visits and prescription drugs will often be copays and not contribute to either the deductible or out of pocket max. Hospital stays and medical procedures having the opposite effect. It is important to review your health insurance plan and understand the coverage and costs associated with each service.
Managing Doctor Visits, Preventive Care, and Other Medical Services
Managing doctor visits, preventive care, and other medical services can still be done effectively despite having a high deductible on your health insurance plan. Here are a few tips to help you navigate these expenses:
1. Prioritize necessary medical appointments: Identify which appointments are crucial for your health and prioritize those. Regular check-ups and preventive screenings should be at the top of your list to catch any potential issues early on.
2. Explore low-cost or free preventive services: Many insurance plans offer preventive services at no cost, even if you haven't met your deductible yet. Take advantage of these services, such as annual physicals or vaccinations, to stay proactive in maintaining your health.
3. Negotiate payment plans with healthcare providers: If you have a high deductible, it can be overwhelming to pay for medical services in a lump sum. Don't be afraid to negotiate payment plans with your healthcare providers. They often have options available to help spread out the costs over a longer period of time.
While these items may not lower your high deductible or prevent you from racking up bills from your chronic condition or a major health event, they can help you reduce the hit on your cash flow. Preventive care helps you avoid larger expenses from unchecked problems, and negotiating can help ease those bills.
Examining Health Insurance Plan Alternatives To Lower Costs
The first thing that we recommend to all Texans is to work with a local, independent insurance agent who works on your behalf and not a specific insurance company. Health Insurance Specialists can help you evaluate not only your current needs, but also what landmines may be waiting for you with your health care. For some, that may mean choosing a High-Deductible Health Plan that comes with lower monthly premiums. For others, that may mean going with a higher priced plan that lowers your deductibles and out of pocket costs. It's truly not one size fits all. They also have access to non-traditional plans that can help you find health savings and better paths to care with healthcare providers that think a different way.
Looking at Other Options to Reduce Costs
When faced with a high deductible on your health insurance plan, it's important to explore other options to reduce costs. You might want to explore alternative types of health insurance plans that can reduce or even eliminate deductibles and out-of-pocket expenses from a major medical plan. Limited benefit plans and indemnity health plans are two such options worth considering. Limited benefit plans provide coverage for specific services, such as critical illness plans or accident plans, and often have lower deductibles and out-of-pocket costs. Indemnity plans, on the other hand, offer a set amount of money for covered services, which can be used to offset deductibles and other expenses. These are two potentially low cost ways to reduce your out of pocket expense dollars if you do find yourself stuck in a high deductible plan like Ricky.
By looking at these other options, you can potentially reduce the financial burden of a high deductible health insurance plan. By doing so, you can find a solution that helps you manage your medical expenses more effectively. If you would like to start a conversation with one of the agents at Insurance For Texans today, simply call us at 469.789.0220 or click the button below.