High-Deductible Health Plans and Budgeting

The Affordable Care Act is a reality of Americans' lives, federal exchanges are operating, the newly insured are flooding the market, and the delayed employer mandate is still on deck. The extension of insurance coverage has also carried with it many effects on personal budgeting, not just for those new to insurance, but consumers whose coverage terms may have changed.

Another reality of the ACA for consumers to consider is the rise of the high-deductible health plan. High-deductible plans have been increasingly selected by employers extending coverage to workers, and some may have seen their out-of-pocket responsibility increase, restricting their personal finances.

HDHPs are prevalent in today's market, but rising costs have caused some to put off care. Avoiding treatment because of costs is a situation to prevent, and learning how to budget while being responsible for a high deductible is crucial.

The Facts About HDHPs
​According to Kaiser Health News, federal regulations define HDHPs as having a minimum deductible of $1,200 for an individual and $2,400 for a family. The deductible is the out-of-pocket costs a consumer is responsible for before insurance kicks in. Out-of-pocket costs are capped at $6,000 no matter marital status.

The draw for employers and employees are the lower premiums associated with HDHPs and often-included free preventative care benefits for immunizations and screenings. Cost control has become the currency of employer health coverage strategy, and because HDHPs fit the bill, their use has grown from 18 percent of all covered U.S. employees to 23 percent in 2014. USA Today, which cited the statistics, said it was the largest yearly increase in HDHP enrollment ever.

However, more HDHPs means more risk for consumers not being able to meet their deductible. The USA Today piece interviewed many such consumers who had to put of arthritis or blood pressure treatment because of financial constraints. To avoid being unable to pay for needed care, here are some tips to budgeting with a HDHP:

  • Take advantage of your HSA: Another benefit of an HDHP is the health savings account that comes with the terms of the plan. HSAs are often attached to HDHPs and allow consumesr to put away money in a special savings account tax-free. Contributions – sometimes made by employers – can go toward a deductible but also accrue tax-deferred interest and are completely the funds of the consumer, meaning they can keep remaining funds at the end of the year.
  • Plan for emergencies: One can never expect a medical emergency, but can always prepare for one. Consider creating another account (or using the HSA to its full potential) to hold funds for use in an emergency. Treat such savings as a monthly expense like rent, utilities or student loan payments. The assurance of a medical emergency nest egg will mitigate with the risk of not meeting a deductible for required care.
  • Keep your eyes open: Consumers are more empowered than ever to find the coverage they want and need. If a deductible proves too high, enter the market and comparison shop around to get the best plan.