Are your health insurance benefits shrinking along with your paycheck? Yes, well, join the club. That’s what we’re hearing from everyone this open enrollment season: take-home pay is going down while deductibles, copays and maximum out-of-pocket limits are going up, up, up!
And if your employer is still offering you health insurance (Wal-Mart!), there’s a good chance that they’re trying to steer you towards high-deductible health insurance this year if you haven’t ended up in a high-deductible plan already. The numbers of employers of all sizes turning to high-deductible health insurance is just continuing to grow, and now more than half of all large employers (20,000+ employees) are offering high-deductible health insurance.
Moreover, seventeen percent of employers reported that more workers were enrolled in high-deductible health plans than in any other type of plan in 2011, up from just 6 percent in 2008, according to an employer survey by PricewaterhouseCoopers.
If your employer is offering high-deductible health insurance as a choice this open enrollment season (and chances are, they are!), here are some things to think about:
What Is High-Deductible Health Insurance?
High-deductible health insurance is health insurance that is designed to protect in the event of … well, a catastrophe. High-deductible plans charge relatively low monthly premiums, but require you to meet a high deductible before they start paying out on your claims.
With deductibles usually starting in the $1,200 range and going up from there, high-deductible health insurance is really set-up to cover you in the case of a medical emergency. Even though plans typically do still cover basic services like annual check-ups and mammograms, you are still responsible for the bulk of your everyday medical expenses like prescription drugs for chronic conditions.
If you have a high-deductible health insurance plan, you are eligible to start a tax-free health savings account (HSA) to pay your deductible, co-pay sand other out-of-pocket expenses. Some employers will contribute funds to your HSA to help pay those expenses.
Should I Join a High-Deductible Health Insurance Plan?
High-deductible health insurance might be a good option for you if:
- You are healthy. If you typically have minimal healthcare expenses, the combination of low premiums and minimal out-of-pocket expenses may save you money.
- You have some money in the bank. If you have a high-deductible health plan, even though the monthly premiums are low, do you need to be prepared to pay out the deductible in the event you do become ill.
- You are comfortable with some risk. If you have a high-deductible health plan and do develop a chronic condition, you may have more out-of-pocket expenses than you originally anticipated. And remember, once you are diagnosed with a chronic condition, it becomes much more difficult to find a traditional plan at an affordable price.
- You can’t afford any other insurance. High-deductible health plans do not offer the comprehensive coverage of more traditional plan, but it is still better than no insurance at all. It will offer some relief if you are diagnosed with a major illness or are the victim of an accident, and if it is all you can afford, it will help.
High-deductible health plans are probably not a good option if:
- You have a condition that requires ongoing care. If you have a condition that requires ongoing care, the out-of-pocket expenses that you will have to spend on an annual basis with a high-deductible plan may mean that a more traditional plan is a more cost-effective option.
- You don’t have money in case of an emergency. Since high-deductible health plans require you to meet a high deductible before coverage kicks in, you need to be prepared to spend thousands in medical expenses before your coverage kicks in. If you don’t have access to that kind of money in the event of an emergency, you should consider other options.
- You don’t like risk. Anyone purchasing a high-deductible health plan needs to be comfortable with the idea that they could be on the hook for meeting the full amount of their deductible in the event of a medical emergency. If you are not, you should really think about going with a more traditional plan.
Do you have high-deductible health insurance? Tell us about it!
- Open Enrollment: Is High Deductible Health Insurance the Answer?
- Open Enrollment Follow-Up: Have You Started an HSA To Go With Your High-Deductible Health Insurance?
- High-Deductible Health Insurance Follow-up: High-Deductible Health Insurance and Health Savings Accounts
- High-Deductible (Catastrophic) Health Insurance Plans: What Are They? Are They Worth It?
- Cost of Health Insurance Benefits Up 9%, Employees Turn to High-Deductible Plans