More than two-thirds of Americans have private health insurance. If you’re one of them, there\u2019s a good chance you have a deductible, i.e., the amount of money you need to pay out of pocket for medical care before your insurance kicks in.<\/p>\n
In 2018, a federal survey found<\/a>, 87.3 percent of U.S. workers with employer-based coverage had deductibles, compared to less than 50 percent in 2002. Basically, deductible health plans are a lot more common than they used to be. And one type of deductible plan, called a “high-deductible health plan,” or HDHP, has seen especially pronounced growth.<\/p>\n As their name suggests, HDHPs are health plans with very<\/em> high deductibles. These plans were rare just a decade ago, and now 40 percent of Americans have them, says Nir Menachemi, a professor at Indiana University’s Richard M. Fairbanks School of Public Health. While, in theory, HDHPs are supposed to encourage cost-conscious use of medical services, the proliferation of high deductibles is one reason healthcare has become prohibitively expensive for so many Americans.<\/p>\n Regardless, if you have a deductible \u2014 high or low \u2014 it’s important to understand how your coverage works. Here’s a starter guide.<\/p>\n With a traditional health plan, you pay fixed monthly premiums so that you can go to the doctor whenever you need to. Then your insurance company picks up the bulk of the tab for the appointments, procedures, treatments and other healthcare services you use.<\/p>\n With a deductible plan, you pay less up front (in the form of premiums) and a much higher share of the costs when you see doctors.\u00a0Your expenses are more proportional to the amount of care you use. Plans with higher<\/em>\u00a0deductibles tend to have lower<\/i> monthly premiums, and vice versa.<\/p>\n “Proponents [of deductibles] believe that people will use care more judiciously if they have \u201cskin in the game,\u201d meaning that they might think twice about using a potentially low-value service such as an unnecessary test or specialist visit if they have to pay out of pocket,” says Christine Eibner, a senior economist at the RAND Corporation.\u00a0<\/span><\/p>\n In practice, Eibner says, research suggests that people with high deductibles tend to cut back on both necessary and unnecessary healthcare.<\/p>\n Deductible plans fall into two main categories: Traditional, low-deductible plans and HDHPs. There are two main distinctions between them:<\/p>\n Deductible amount<\/em><\/strong>:\u00a0 To qualify as an HDHP<\/a>, a plan must have a deductible of at least $1,400 for an individual or $2,800 for a family. If your deductibles are lower than that, you have a low-deductible plan.<\/p>\n HDHPs also have an out-of-pocket maximum of $6,900 for an individual or $13,800 for family. The out-of-pocket maximum is the most you\u2019ll be required to pay for in-network covered services in a given year. If you reach this amount, your insurance will pay the full cost of all additional covered services (but you’ll still need to pay your monthly premiums). The IRS sets both the deductible minimums and out-of-pocket maximums every year.<\/p>\n HSA eligibility<\/em>:<\/strong> If you have an HDHP, you can put money into a Health Savings Account to use for medical expenses. This money is tax-exempt (thereby reducing your taxable income) and yours to keep \u2014 your HSA account stays with you if you change jobs, and any unused balance rolls over into the following year. HSA accounts can only<\/em> be paired with HDHPs. FSA accounts are an option if you have a low-deductible plan; these funds are similarly tax-exempt, but lack the other advantages of HSA accounts.<\/p>\n Low initial cost is the primary reason to choose an HDHP over a lower-deductible (or zero-deductible) plan. HDHPs must cover in-network, preventive services without imposing any cost on patients \u2014 whether or not they’ve met their deductible. So a <\/span><\/strong>young, generally healthy person on a tight budget might decide an HDHP meets their needs. <\/span>Although, if that<\/span> person ends up going to the ER or needing unexpected specialty care \u2014 or even having a baby<\/a> \u2014 out-of-pocket costs could tip the scale.<\/span><\/p>\n HSA eligibility can also be a draw. Some employers sweeten the deal by putting money in employees’ HSA accounts to cover out-of-pocket expenses, says Joel Segel, an assistant professor in the department of health policy and administration at Penn State University. Although, one recent study<\/a> found that most people with HDHPs don’t even set up their HSA accounts.<\/p>\n In many cases, people choose HDHPs because they’re the cheapest or only option. Rising premium costs have pushed more employers to offer HDHPs in place of traditional coverage. In 2016, 24 percent of employers offered only high-deductible plans, compared to 7 percent in 2012. (Although, this trend may be receding somewhat<\/a>.) HDHPs have also become the most common type of plan available on the healthcare exchange.<\/p>\n For preventive care <\/strong>(e.g., annual check-ups, well-woman exams and most immunizations and screening tests):<\/span><\/strong><\/p>\n For a non-preventive covered service<\/strong> (e.g., emergency care, many diagnostic tests and prescription drugs):<\/span><\/p>\n For any non-covered service <\/b>(e.g., cosmetic procedures and most experimental treatments), you’ll always have to foot the bill, and it won’t have any bearing on your deductible.<\/span><\/p>\n In practice, preventive and covered services can be misclassified by mistake, or even become intertwined.<\/p>\n “Even if [a patient] goes in for what they think is a preventive service,” Segel says, “there can be a couple of issues.” For one thing, proper coding matters a lot: \u201cIf a woman goes in for a mammogram it has to be coded as preventive not diagnostic. I wouldn’t say this is extremely common but can be good to discuss upfront what the patient is expecting.”<\/p>\n Also, extra services related to preventive care usually aren’t free. If an initial mammogram is abnormal, Segel explains, a woman might need a follow-up ultrasound that wouldn’t be considered preventive.<\/p>\nHow deductible plans are different<\/h2>\n
You either have an HDHP or a low-deductible plan<\/h2>\n
Why would someone choose an HDHP?<\/h2>\n
How do you know if a visit, procedure or other service goes toward your deductible?<\/h2>\n
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Don’t make any assumptions<\/h2>\n