Tips and options for end-of-year planning
contributed by Taylor Rogers
Many companies change health plans at the end of the year. It is critical for those with existing needs to understand the nature of these changes and how their care will be impacted moving forward. There is a laundry list of acronyms in the health insurance world, and selecting the ‘wrong’ plan for your circumstance can either cost or save you thousands of dollars. Always factor the premium contributions, expected medical expenses, and financial ability to cover unexpected expenses into your health plan selection.
What should people consider when updating or choosing a new plan?
Members need to consider their existing and potential medical needs in relation to their household budget. It is not always as simple as “I have an expensive condition, I need the richest health plan,” as you must also consider the premium contributions that are coming out of your paycheck.
For example, someone with type 2 diabetes may feel they should select a $1,000 deductible plan with low pharmacy copays, due to their known drug and physician expenses. However, if that plan is $4,000 more per year in premium contributions, perhaps a $5,000 HSA-qualified plan with 100 percent coinsurance is a better option, knowing you will also be able to pay for your health expenses with tax-free dollars.
What about using your HSA; does it roll over to the next year?
An HSA is a great tool for individuals or families who feel confident in their ability to manage expected or unexpected medical expenses. HSAs must be accompanied by a qualified high-deductible health plan (HDHP), which requires the member to be responsible for all medical expenses up to a his or her deductible.
HSAs allow members to put away and use funds tax-free for approved medical expenses. The money is retained by the individual in perpetuity. It is important to note the median household in America has approximately $5,000 in combined checking and savings assets, which could be consumed by a single health encounter. For those individuals, it may be advantageous to select a non-HSA qualified plan with reasonable physician and prescription copays, even if the patient responsibility for hospitalization or emergency is considerably higher. These individuals can often take advantage of charity care options and payment plans to assist with out-of-pocket responsibility for unforeseen expenses.
What can people do before their deductible starts over?
I recommend refilling prescriptions, and checking your deductible accumulation to see if scheduling any important but non-urgent care makes sense. If you’ve accumulated very little to your deductible, it could make sense to schedule for the beginning of the year. If you are near your deductible or out-of-pocket maximum, it could make sense to schedule before the end of the year. Make sure you schedule as soon as possible, as physicians’ offices tend to fill their schedules for the end of the calendar year.
What about getting services after meeting your deductible?
Once members hit the deductible, they often have a responsibility called ‘co-insurance.’ This is a percentage of the total claim members are responsible for until they meet their out-of-pocket maximum, and it typically ranges from 10 to 30 percent of the total allowed charges.
Any tips for those with non-traditional health plans?
I encourage members to always ask: 1) What does this service cost? 2) What are the possible outcomes if I choose not to proceed? 3) Are there any alternative treatment options?
There is a great myth that if “insurance covers it,” we do not pay for it. The cost of unnecessary and costly treatment is felt through increased premiums and increased deductibles and patient responsibility for years to come.
For individuals in non-traditional arrangements like health sharing plans, there is a unique “unsharable amount” (effectively a deductible) for each specific encounter. In these arrangements, it is essential for an individual to understand the cost and value of a service to ensure that it is of sufficient value to proceed.