Managing High Deductibles
Out-of-pocket health costs are growing far faster than Americans’ paychecks, said Korin Miller in Yahoo.com. Deductibles, the amount patients must pay for medical care before coverage kicks in, have increased more than six times faster than workers’ wages since 2010, according to a new analysis by the Kaiser Family Foundation, which studies health-care policy. The average deductible now costs $1,300 per year for an individual insurance plan, up from $900 in 2010. Expect that figure to keep rising, as more employers look to rein in higher health-care costs with high-deductible plans, said Tom Murphy in the Associated Press. Obama care’s “Cadillac tax”—a 40 percent tax on employersponsored plans that offer coverage above $10,200 per individual and $27,500 for a family—takes effect in 2018, and companies are already maneuvering to avoid it, often by shifting employees to high-deductible plans. As open enrollment approaches this fall, a quarter of employers say they ’re planning to add high-deductible plans to their offerings, in addition to the 41 per cent that already do, according to benefits consultant Mercer.
These plans can be tempting to healthy consumers who don’t anticipate many doctor’s visits, but they often come with medical bill “sticker shock,” said Ann Carrns in The New York Times. Almost a third of respondents in a recent Consumer Reports survey said they have received a medical bill that was bigger than they expected. In addition to high deductibles, “patients are often tripped up by charges for out-of-network care.” Even when using an in-network hospital for elective surgery, for instance, patients may still receive treatment—and a bill—from out-of-network specialists. Think carefully about the trade-offs: While a high-deductible plan might keep more money in each paycheck, paying higher premiums might be worth it if you can’t come up with $2,000 for out-of-pocket costs in a pinch.
“With wages largely stagnant, benefits are the new salary,” said Suzanne Woolley in Bloomberg.com. Make the most of them. High-deductible health-care plans are often offered with health savings accounts (HSA), which allow patients to save money tax-free for medical expenses, like prescription co-pays and doctor’s visits. Not only can an HSA “bridge the deductible gap,” it offers a “rare tax-exempt trifecta.” The money saved in an HSA isn’t taxed and also grows tax-free when invested in vehicles like mutual funds. Withdrawals aren’t taxed either, so long as they are used for qualified medical expenses. One common suggestion is to invest the money you save on lower premiums with a high-deductible plan (on average, $50 a month lower than a PPO plan) into an HSA. Whatever you don’t spend rolls over from year to year, meaning it can even double as retirement health savings.
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