Are High Deductible Health Insurance Plans Right for You? – Oakland Press

Kerry Dooley Young
Special to The Washington Post

For millions of Americans, the end of the year means it’s time to reconsider health insurance as open enrollment for 2025 has already begun. This typically occurs in October and November for the 154 million people who get their plan through work; for an additional 21 million people who access insurance through government marketplaces created by the Affordable Care Act (ACA), it began on November 1 and runs through December 15.

One of the biggest disruptions in recent years has been the rise of high-deductible plans, which offer lower monthly premiums but require consumers to pay more of the initial medical costs out of pocket before the plan’s coverage kicks in. While their cheaper premiums may look like it, consumers risk paying much more if they experience unexpected illnesses or if they don’t have enough budget for more regular care.

Here’s what you need to know when it’s time to choose a health insurance plan:

How are high deductible plans different from other options?

Most Americans are familiar with the more traditional “preferred provider organization” (PPO), which offers a larger network of participating healthcare professionals and a lower deductible in exchange for a higher monthly premium. They can be a good choice for people who need more than routine medical care. They also typically have lower copays and do not always require patients to get permission from their primary care provider to see specialists.

Some employers also offer a health maintenance organization (HMO) option, which typically charges lower premiums but places more restrictions on access to specialists, with primary care physicians sometimes acting as “gatekeepers.”

Both types of plans have given way to high-deductible plans. In 2006, only 4% of workers were covered by them; By 2024, that share will be 27%, according to nonprofit health policy research organization KFF. During the same time, the proportion of people in OPOs fell from 60% to 48%, and the proportion of people in HMOs fell from 20% to 13%.

Why can high deductible plans be risky?

Many Americans have experienced shock in recent years as deductibles have risen for most types of plans. HMO or PPO plans average about $3,000 per year for family coverage (when everyone’s out-of-pocket costs are factored into the deductible), compared to nearly $5,000 for high-deductible plans.

The ACA established federal requirements for most health insurance plans, including high-deductible plans, to ensure that the most basic routine preventive services (such as mammograms and colorectal cancer screenings) do not require copayments. But given the coverage threshold in high-deductible plans, enrollees are more likely to cut back or delay other types of preventive care and routine treatment to save money, research has shown.

In other cases, consumers may delay routine treatments and screenings until later in the year, after they have met other health care expenses, in order to reach their deductible. This may be especially risky for those with chronic conditions such as heart disease and diabetes, potentially leading to missed opportunities for earlier intervention.

Given that these plans can result in huge out-of-pocket bills, people with high incomes are better able to finance their health care, while people with lower incomes are at greater risk, said Sabrina Corlette, co-director of the Georgetown University Research Center. Health insurance reforms. She urges “caution” before signing up, despite the appeal of lower premiums.

This is especially true for the millions of Americans who lack money even for basic necessities. A 2022 Federal Reserve survey found that about 37% of adults in the United States cannot fully cover a $400 unexpected expense with cash or a cash equivalent such as a credit card.

Why have health insurance deductibles become so expensive?

Deductibles have increased in part because of broader increases in drug prices. Another driver is the consolidation of the healthcare system. Larger systems can demand higher prices, and because employers want to offer plans that include large hospitals in their region, hospitals have more power in price negotiations, Corlett said.

“Employers and insurance companies are passing these costs on to consumers,” she said. “This is done both through higher premiums and through higher deductibles and other forms of cost sharing.”

The consolidation trend has drawn the attention of the Justice Department’s antitrust division, the Federal Trade Commission and the Department of Health and Human Services, which have launched a joint investigation into how mergers and acquisitions, especially through private equity, are driving up health care costs.

Could health savings accounts help consumers cover some of these costs?

Created in 2003, HSAs allow people to set aside a tax-free portion of their paychecks for health care expenses. These accounts are becoming increasingly popular among those on high-deductible plans because they can be used to cover bills before the deductible kicks in. Employers offer them in tandem with high-deductible plans and sometimes match the cost. HSAs are also attractive because they are portable and investable, so employees can take them with them to a new job or move them.

However, it is this feature that has led to criticism of HSAs as a tax shelter for the rich, who have more money to divert into these accounts. A Congressional Research Service report based on 2017 IRS data pointed to this income split: Up to 17% of reports reporting adjusted gross income between $200,000 and $499,999 reported using an HSA, while less than 4% income reports from $10,000 to $24,999 did.

If I have a choice of health insurance plans, which option is best for me?

The answer depends on your personal and financial circumstances. But experts agree that you need to consider more than the monthly premium. If you only need routine preventive care, a high-deductible option may be attractive if you accept its coverage limitations as a trade-off.

But people need to be realistic about their potential financial obligations and consider what would happen if they had an unexpected illness or accident, says A. Mark Fendrick, director of the Center for Value-Based Insurance Development at the University of Michigan.

“Even if you think you’re a superhero, you need to make sure you can meet your plan’s deductible,” he said.

Experts also advise taking a close look at what services are included in different plans.

Denise Maston, a human resources consultant at SHRM who used to work for government contractors, recalls conversations with employees who were initially attracted by low insurance premiums. After telling them to think about their families’ potential health care needs, they often made different choices, she said: “When they did the math, they discovered that the cheaper plan actually made them pay more.”

Regardless of what you choose, you should also make sure your plan’s information about in-network providers is up to date by checking with their doctor’s office. Sometimes insurer directories are inaccurate, leaving people struggling to find new doctors and hospitals or risking higher costs for out-of-network care.