About High-Deductible Health Plans
So-called “high deductible health plans” are a lot like conventional (PPO/HMO) insurance plans, but they typically have higher deductibles (over $1,000 per year). The idea is that even though the deductible is high, you save so much money from the lower monthly premium costs that the HDHP is a better deal in the long run, when used in conjunction with a tax-free Health Savings Account (HSA).
Last year, in order to setup an HSA, you needed to find a High-Deductible Health Plans that met the following qualifications:
1.A minimum deductible of $1,000 for self or $2000 for family coverage.
2. A maximum out-of-pocket limit of $5,100 for individual coverage, and $10,200 for family coverage.
3. Preventive care can have first dollar coverage (i.e. without a deductible). Preventive care examples include: periodic health evaluations like annual physicals, screening services like mammograms, routine prenatal and well-child care, child and adult immunizations, tobacco cessation programs, and obesity weight loss programs.
Prescription drugs taken to prevent the onset of a condition for which a person has developed risk factors for can be considered preventive care, like cholesterol-lowering medication. A general rule of thumb for what is or is not preventive care is the care does not include any service or benefit which treats an existing illness or condition.
4. The plan can use co-pays to cover preventive care. Higher out-of-pocket (co-pays and co-insurance) is allowed for out-of-network care.
5. The can’t cover prescription drugs before the deductible is met.
HDHP’s often offer a better value for money as compared to a lower deductible plan. HDHP premiums are significantly lower, and any out-of-pocket cost risk to can be minimized by funding an HSA to cover out-of-pocket costs up to your deductible. Also, HDHP premiums have not been subject to the kinds of rate increases that traditional health plans have seen over the last few years.
This is not true in all states and for all health plans.
Some have said that consumer-driven health plans, like the HSA+HDHP combo, works best for relatively healthy people. It is certainly true that if you’re healthy, and don’t use medical services during the year, you’ll save a lot of money with a high-deductible plan. But it’s also true that CDH plans, applied wisely, can result in savings and greater flexibility for consumers of all kinds. Individuals who are likely to make moderate or heavy use of medical services should be sure to understand the benefits covered under their plan, and should pay special attention to the co-insurance, maximum out-of-pocket, and any exclusions or carve-outs. Healthia’s health cost modeling tool can help you decide if a CDH plan will work for you.
Kurt Stammberger is VP, Marketing at Healthia Inc. Healthia was founded in 2005 to provide integrated comparison-shopping information on health insurance products and services for groups, individuals, families and small business employees.
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