Common Consumer Pitfalls on a High Deductible Health Plan
Four HDHP Pitfalls Consumers Commonly Face
Pitfall #1: Not Understanding Your HDHP
You cannot take full advantage of your HDHP unless you understand its benefits and your responsibilities. HDHPs are quickly growing in popularity, but surveys reveal that many consumers do not have a grasp of how HDHPs vary from traditional healthcare coverage.
High Deductible Health Plans (HDHPs) feature monthly premiums which are lower than those of traditional health insurance plans like HMOs or PPOs. In exchange, you pay more out-of-pocket before your insurance company begins to pay. Also, to help you budget and prepare for the medical expenses you will incur throughout the year, the IRS allows you to open and contribute to a Health Savings Account (HSA).
Solution: Talk to your employer or your benefits coordinator for specific information regarding your HDHP. Call Member Services on the back of your insurance card. Explain that you have recently enrolled in an HDHP and you have some questions. For general information about HDHPs versus traditional health insurance, see our Understanding Your Insurance page.
Pitfall #2: Not Opening an HSA
HDHPs are attractive because of their lower premiums, which means you keep more of your paycheck. It is tempting to see this savings as a salary boost instead of an opportunity to invest in a Health Savings Account (HSA). Many people who are on an HDHP are unaware that HSAs are a unique benefit of an HDHP and that they can make monthly contributions to their HSA, tax-free, to fund their medical expenses. The IRS allows you to set aside $3,450 annually (pre-tax) for an individual and $6,900 (pre-tax) for a family to pay for qualified medical expenses, including your deductible. Many consumers are missing out on this benefit because they do not understand what an HSA is, or they think they do not need one. Not opening an HSA can cause other pitfalls that result from being unprepared when medical needs arise.
Solution: Call your insurance company and ask how you can apply for an HSA. If you meet the appropriate criteria, you can open an HSA and begin making tax-free contributions.
Pitfall #3: Neglecting Preventive Screenings
Many people on HDHPs are unaware that in-network preventive care is free, and they miss out on thousands of dollars of covered medical expenses. Even though you are on a high deductible plan, you do not have to pay for every doctor visit and procedure. Screenings and preventive services such as colonoscopies, mammograms, immunizations (including the flu shot), blood pressure screenings, depression screenings and contraceptives are covered at 100 percent if you go to an in-network doctor.
Solution: Call Member Services on the back of your insurance card and get an updated list of no-cost preventive screenings and services. Before you make an appointment, verify with your insurance company that the doctor you have chosen is in-network so you do not incur a charge.
Pitfall #4: Delaying treatment to try to save money
Many people on HDHPs admit that they are spending less on healthcare, and sometimes skipping the care they need. If you are on a tight budget, you might try to avoid spending money on medical expenses. This might seem like a logical way to make ends meet, but delaying important doctor visits, treatments and procedures could be detrimental to your physical health as well as your financial security. For example, ignoring chronic back pain could result in an expensive surgery and hospitalization a year from now. Putting off several years of comprehensive eye exams could delay detection of a degenerative eye condition that can permanently affect your vision and quality of life.
Solution: When you need a procedure, plan ahead. Shop around to find lower prices, and use your insurer’s price transparency tool. Create a budget, and save toward your goal. Remember, the money that you deposit into your HSA is tax-free and can be used toward your deductible. If you need an expensive procedure that meets your deductible, you should plan other covered procedures in the same calendar year before your deductible resets.
Don’t Fear Asking Questions About Your HDHP
If you do not understand your HDHP, ask for help. Just as electronics and cars have a user’s manual, your HDHP has specific guidelines and regulations. Talk to your employer or benefits coordinator for literature and resources to help you make informed choices about your healthcare. It takes time and patience to learn how to maximize your benefits on an HDHP, but the cost savings are worth the effort. Open an HSA, take advantage of free screenings and services, and plan for necessary procedures.