Bridging the Gap
of High-Deductible Health Plans
July 1, 2014
Vol. 10, Issue 7
One sure way to help keep health insurance premiums lower is to choose a plan with a high deductible - generally the higher the deductible, the lower the premium. This is all good and well until you actually need to seek medical care, then that large deductible is staring you straight in the eye. Here are a few tips to make paying out your high deductible a little less painful on the wallet.
Health Savings Accounts. With most high-deductible plans you are able to establish a health savings account (HSA). With an HSA you can put pre-tax money aside to cover future medical expenses. By maximizing your HSA contributions (as noted below), you’ll have plenty of tax-free money in savings to help cover your deductible and other out-of-pocket costs.
|Minimum Deductible||Maximum Deductible||2014 Contribution Limits|
You’ll also receive an above-the-line tax deduction on your tax return, thereby lowering your tax liability by as much as $2,161 per year. Decreasing your modified adjusted gross income can also help you qualify for federal premium assistance. Money accumulated in your HSA can be spent tax-free on qualified medical expenses. Learn how you can maximize your HSA dollars on our HSA Web page.
Supplemental Accident Plans. A 2013 survey completed by the U.S. Department of Health and Human Services showed that there were 37.4 million accidents for which medical attention was sought in 2012 (that’s a ration of 120 accidents for every 1,000 people). The report goes on to note that the four leading causes of injury were:
- Persons being struck by another person or object
- Transportation accidents
These statistics are what lead me to highly encourage you to consider a Supplemental Accident Plan. I’m speaking from experience when I tell you how beneficial an accident plan can be. My son, Wiley IV, has had his share of accidents in recent years, with our last emergency room bill being over $1400.
These plans reduce your deductible to only $100 and pick up your out-of-pocket costs up to the benefit amount of your choice - ranging from $2,500 to $10,000. It was nice to know that my $1400 bill was only going to cost me $100.
Shop Around and Save Big. Before you start forking over money, check out all of your options. Blood tests and imaging studies including CT scans and MRIs can get quite costly. By taking advantage of various discount offers, you can save a bundle. I always use a discount lab when having my own blood work done and recently had a thorough screening that would typically cost $565 - my cost was only $97!
Prescription Discount Cards. Many high-deductible plans also apply a deductible to prescriptions. There’s no doubt when you need a prescription, you need it now! With a prescription discount card, you get immediate savings substantially lowering the cost of your prescription. Many stores and pharmacies also offer $4 prescription programs and some even offer a range of antibiotic prescriptions at no cost - that’s correct, I said our favorite four-letter word - FREE!
Cost-Sharing . If you have a high-deductible health plan and receive an advanced tax credit to reduce your monthly premiums, it’s possible you might also be eligible for cost-sharing and don’t even know it.
Cost-sharing is based on income and is determined at the time you apply for your premium tax credit and immediately reduces your deductible, out-of-pocket maximum, and other out-of-pocket expenses. So although your plan may be represented as a $2,500 deductible plan, it’s possible your deductible could be significantly reduced or even $0. For example:
One of our HSA for America Personal Benefits Consultant, Justin Brogdon, has a client who signed up for a $2,500 deductible Kaiser Health Plan in Georgia. Based upon income, this clients deductible with cost-sharing was reduced to $0, and her out-of-pocket maximum was cut in half. Copays were also significantly reduced.
I hope these options will help you better navigate your high-deductible health plan, but of course many of these options also work well even if you don’t have a high deductible - after all, who doesn’t want to save money?
To your health and wealth!
"Have a Happy 4th of July"
President - HSA for America