High-deductible insurance plans are one of the more popular remedies to deal with rising health care costs. A 2014 study by Bankrate.com found that about 40% of the respondents preferred a plan with lower premiums and a high-deductible. So perhaps it is not surprising these plans are also called consumer-driven health plans.
Based on IRS guidelines, the minimum deductible for these plans in 2015 is $1,300 for an individual and $2,600 for a family. Out-of-pocket maximums for high-deductible plans are $6,450 for individuals or $12,900 for families.
Some plans cover many minor issues with small co-pays or no co-pays, according to healthresearchfunding.org. For major medical problems like those requiring surgery or a hospital stay, the cost to the patient could be fairly high depending on the plan design. However, in return for having to bear a higher portion of the procedure cost, patients can typically expect to pay much less in monthly premiums.
When determining if a high-deductible health plan is an appealing choice, patients should weigh the potential risk of higher medical cost exposure against the reward of lower premiums. This depends entirely on how much a person anticipates using the plan throughout the year.
Here are some important facts to understand about high-deductible health care:
1. What size companies are best suited for high-deductible plans? According to a PwC Touchstone Survey, up to 44% of employers offered a high-deductible insurance plan as the only option for their employees in 2014. This is a dramatic increase in a relatively short time. Companies of all sizes and industries are turning to high-deductible consumer-driven health plans as a means of controlling health care costs.
2. How do benefits compare for employees in a high-deductible plan versus a traditional co-pay plan? Actuarial value is a concept that is used to determine how much of the overall medical costs would be paid by the plan versus the participant. In some cases, high-deductible health plans have a higher actuarial value and provide better coverage than traditional co-pay plans. In other cases, the opposite is true. It all depends on how the plans are designed. Additionally, the Affordable Care Act requires both types of plans, regardless of design, to provide preventative treatments and screenings at no cost to the patient.
3. What are the advantages of a high-deductible plan for the employer? For the employee? For both employers and employees the primary advantage of high-deductible plans is that premium costs can be significantly lower. A study at Carnegie Mellon University found that overall savings at companies that switched to high-deductible plans lasted for up to three years.
4. What are the disadvantages for employers and employees? While the short-term advantage of cost savings is certainly real and welcomed, there is a potential long-term pitfall that should be considered: failure to get necessary treatment.
“What nobody knows is whether such plans, also sold to individuals and families through the health law's online exchanges, will backfire,” Jay Hancock said in an article in Kaiser Health News. “If people choose not to have important preventive care and end up needing an expensive hospital stay years later as a result, everybody is worse off.”
In that case, more employee sick days and a higher frequency of large claims are potential disadvantages of high-deductible health plans.
5. What about cost and impact? According to a statement by Dr. Don McCanee, published by Physicians for a National Health Program, one of the main reasons employees and employers choose a high-deductible plan is because the premium is less expensive. In addition to lower premiums, high-deductible health plans create better overall health care utilization habits.
“While some are putting off necessary treatment, a more prevalent consequence of high-deductible health plans is a tremendous uptick in health care consumerism. Historically, no one had to be good consumers because health care was almost free. We now see employers, with the help of sophisticated benefits firms, providing incentives and education to drive employee consumerism and lower costs. And, it's working,” said Sozon Vatikiotis, CEO of Alltrust Insurance.
6. Are there any complicating factors when switching from a traditional co-pay plan to a high-deductible plan? Switching from traditional co-pay coverage to a high-deductible plan is a straightforward process. It is no different than selecting any other type of plan. In fact, many employers often offer a high-deductible health plan in conjunction with a co-pay plan to provide something for everyone. In short, high-deductible health plans, while not perfect, are an appealing option for almost all employers and employees.