THE OOP PREDICAMENT

Save, Shop & Supplement

• Cost of healthcare for family of four with employer PPO averages $27,000
• 66% of American workers live paycheck to paycheck
• 39% of workers had a High Deductible Health Plan
• 43% of insured adults have difficulty paying their deductible
• 25% Americans put off needed care or use a home remedies instead of seeing doctor

A high deductible health plan (HDHP) is health insurance where premiums are lowered because your upfront out-of-pocket costs (deductible) are higher than a traditional health benefits. The IRS defines a high deductible health plan as any plan with a deductible of at least $1,300 for an individual or $2,600 for a family. That said, millions have health plans with deductibles in excess of $6,000.

HDHPs are here to stay!

As HDHPs approach half of all health insurance plan designs, there’s no going back – ACA, AHCA, BCRA, Obamacare, Ryancare or Trumpcare – it doesn’t matter. Employers are quickly moving workers to HDHPs to reduce health care expenses. The result is shifting more financial burden to employees, and that newfound upfront deductible responsibility is a heavy financial burden…4 in 10 employees with employer-based health insurance say they have difficulty affording their deductible.

In today’s out-of-pocket OOP health insurance ecosystem where policies revolve around more money coming out of your personal budget, three strategies to manage your exposure are worth considering:

SAVE – Establishing a Health Savings Account (HSA) is certainly an option. There are 20 million HSA accounts holding $37 billion in assets nationwide. The rub: 58% of HSA accounts have household income over $100,000. An HDHP is a core requirement for having an HSA allowing you to pay for certain medical expenses with money free from federal taxes. The ins & outs of HSAs can be tricky, so be sure to get familiar with the rules. Here’s an HSA GUIDEBOOK.

SHOP – Retailization of healthcare is here. This means comparison shopping for health insurance online, not unlike Amazon or Jet. It also means shopping for health care services, from prescription drugs to routine check-ups to MRIs. Once consumers find themselves in control of budgeting and spending OOP health dollars, you have their attention. But let’s be clear, shopping for health care isn’t easy. There are health literacy issues, access to consumer-centric resources and most of all…“Nobody knew that healthcare could be so complicated”. Here’s a recent review of HEALTHCARE SHOPPING.

SUPPLEMENT –Filling the gap created by a high deductible health plan with a supplemental or ‘wrap-around’ plan can provide important financial protection. A leading benefit broker reports 34% of the people they enrolled in an employer plan with a deductible of $1,500 or higher are also enrolled in at least one supplemental health plan. Typically, these low-cost plans take the form of fixed indemnity insurance: you receive a pre-set dollar payout for a ‘qualifying event’ – wrapped around a HDHP this may include physician visits, outpatient procedures or tests, or in some instances hospitalizations. Here’s a look at SUPPLEMENTAL COVERAGE OPTIONS.

With HDHPs, consumers are being asked to take more personal responsibility for their healthcare financial & medical decisions. They need help making smart, value-based choices. Health Saving Accounts with considerably lower plan premiums and a tax advantaged structure are an excellent option…but not for everyone. Funding these accounts isn’t for every budget. Being a ‘smart health care shopper’ makes good sense, after all, why should health care be different than the rest of our daily retail purchasing experiences…but it is. Accessing reliable information and understanding it is going to take Americans time as well as the right tools to navigate healthcare’s massive maze of information. Supplementing HDHP’s upfront financial obligations with a gap plan isn’t new – think Medicare Supplement or Medigap. But, balancing this type of insurance ‘layering’ may not be for every budget and has to be done deftly.

The 'save - shop - supplement' options are not mutually exclusive. We all need to be better, smarter healthcare shoppers, with or without an HSA or supplemental plan. One thing is for sure, the future of HDHPs is set. The next question is how high can your out-of-pocket go?