Making the Most of a High-Deductible Health Plan

Over the past decade, Americans have dealt with steadily rising costs of health insurance. They're expected to spend an average of $541 per month and $6,492 for the year in 2022 — costs that are either hard or impossible for many families to absorb.

As a result, people are trying to find the health coverage options that will protect their health and their pocketbook, and a growing number are choosing to opt in to high-deductible health plans (HDHP) to combat high monthly premiums. In fact, 51% of the workforce was enrolled in an HDHP in 2019.

Part of knowing how to navigate health insurance is knowing how to keep costs under control, and HDHPs can do that by offering low monthly premiums in exchange for higher out-of-pocket limits and deductibles. But before committing, it's important to understand how high-deductible health plans work, as well as high-deductible health plan pros and cons.

Here's what you need to know.

How High-Deductible Health Plans Work and What That Means for You

HDHPs are required to set minimum deductibles and maximum out-of-pocket costs. The minimum deductible in 2022 is $1,400 for an individual and $2,800 for a family; the maximum for out-of-pocket costs is $7,050 for individuals and $14,100 for families. HDHP deductibles can be as high as the maximum out-of-pocket costs allowed. According to a Kaiser Family Foundation survey, 29% of covered workers have annual deductibles of $2,000 or more.

Knowing when to choose a high-deductible health plan can be tricky. With an HDHP, you risk greater financial burdens even though you're paying less in premiums each month. That's because people with HDHPs pay for all of their healthcare costs until they meet the deductible, and they still have to pay copays and coinsurance. Notably, it might be difficult for some people to cover the costs of a deductible for a major medical procedure. In fact, according to an Insure.com survey, at least 40% of HDHP consumers delay treatments, tests, and prescriptions because the associated out-of-pocket costs are too high for them to afford at the time they need these services.

The truth is that only you can make the decision about a high-deductible health plan. When considering whether or not it's right for you, evaluate your physical health and your budget. If you are an overall healthy person who likely only needs routine screenings and occasional care, or if you've saved enough to cover your deductible, HDHPs may be a good option for you. However, if you anticipate more costly medical care in the next year, it might be smart to rethink committing to a high-deductible health plan.

How to Navigate Health Insurance With a High-Deductible Health Plan

Here are a few important tips to help you survive with a high-deductible health plan:

1. Understand what's in your plan.

When booking a medical appointment, it's important to know what's included in your plan before reaching your deductible. Preventive and routine health services are free in many insurance plans, so ensure you understand your coverage.

2. Keep track of your deductible.

Keep track of your spending against your annual deductible and out-of-pocket maximum. These reset every year, so it's important to time procedures correctly. For example, if you anticipate an expensive procedure in 2022, schedule it earlier in the year. By doing so, you can reap the benefits of insurance later in the year when you might need further care.

3. Remember alternative healthcare solutions.

Alternative healthcare solutions can help you save money on minor healthcare issues, reducing your out-of-pocket costs under your HDHP. For example, Health Karma offers a Membership Plan that features an affordable monthly rate for unlimited virtual urgent care, virtual primary care, and virtual behavioral health sessions. This allows consumers to enjoy treatment for common health issues at their convenience without the high costs. The plan also includes special discounts for dental, vision, and hearing services, prescriptions, vitamins, and supplements. This solution empowers people to take charge of their health without worrying about not being able to afford care under their HDHP.

4. Explore ways to save on prescriptions.
Medications continue to be one of the biggest out-of-pocket expenses for consumers. Fortunately, other options are available, such as HealthKarmaRx, which has access to over 65,000 pharmacies nationwide. Solutions like this allow you to compare the prices of thousands of prescription drugs and receive coupons to reduce healthcare costs.

5. Open a health savings account (HSA).

If you have an HDHP, you are eligible for an HSA. An HSA is a personal savings account that can help you cover out-of-pocket medical costs. These accounts also have many tax advantages, namely that they are not subject to federal income tax. Unused funds build and roll over every year, too, so you can use them to pay qualified medical expenses — including your deductible.

In the end, while HDHPs may require more planning, they can be a great fit for some people. To learn more about affordable healthcare solutions, visit healthkarma.org today.