Posted September 18, 2017
High-deductible health insurance plans have become a popular choice for American employers and employees wanting to control health care costs. While these plans have low monthly premiums, employees can pay more out of pocket for medical costs before insurance kicks in. Here are five things to know before enrolling in a high-deductible plan:
Understand insurance costs – More than half of American workers get health insurance through their employers. Many employers cover about 70 percent of the health insurance premium for employees, with workers paying the remaining amount through monthly premiums.
This year, health insurance plans are costing around $10,000 per employee for the annual premium. Experts estimate this amount will increase about 5 percent in 2018 to just over $14,100. In comparison, inflation grew about 2 percent, and each year workers’ salaries on average increase by 3.2 percent.
Study plan design – Nearly 90 percent of employers offer a high-deductible health plan. Most large employers include a high-deductible plan with several other choices. Smaller businesses may offer only high-deductible plans.
- The Internal Revenue Service requires that high-deductible plans have an annual deductible of at least $1,300 for individuals and $2,600 for families.
- In 2016, nearly 40 percent of workers enrolled in a high-deductible health plan, compared to 26 percent in 2011.
High-deductible plans usually feature a lower monthly premium, compared to other plans, because users pay for medical and prescription expenses until satisfying the deductible. However, research shows that plan participants often put off going to the doctor, or getting drug prescriptions filled, because they cannot afford the cost.
Financial experts report that most employees have less than $1,000 in personal savings. So they cover unexpected medical expenses with their credit cards, or borrow money from family and friends.
Weigh plan choices – Review plans to understand the coverage provided. What are the copayments for doctor office visits, urgent care, prescription medications, medical tests and procedures, and specialists? What is the coverage for preventive care? Discuss coverage options with insurance representatives to compare plans.
Estimate health care needs – Before choosing insurance coverage, evaluate your budget and health needs. List current expenses for your home, vehicle, food, childcare, other insurance plans, incidentals, health services and prescriptions. Compare fixed costs against projected income to determine the health insurance plan that fits your budget.
Assess voluntary choices – High-deductible plans can keep monthly premiums affordable, but often employees also want access to other voluntary benefits with preventive care choices, such as dental and vision coverage.
Some employers are offering a voluntary student loan repayment benefit, such as BenefitEd. This is an excellent program for employee recruitment and retention. Research shows that 76 percent of prospective employees would accept a job from an employer offering this benefit.