Despite its scary-sounding moniker, an HDHP isn’t a new social disease; it actually stands for “high deductible health plan.” Not being aware of your HDHP status may not put your health at risk, but it could definitely put a major hurt on your wallet if you don’t go in eyes wide open.
HDHPs–also known as “consumer-directed health plans”–have lower monthly premiums than traditional health plans, but as the name implies, they also have higher deductibles (the fixed amount you pay out of pocket before your plan begins covering your care). HDHPs are quickly becoming the default type of insurance plan offering on the market because they’re cheaper for employers, insurers, and consumers, who will soon be required to purchase health care insurance as part of the Affordable Care Act.
Having an HDHP means that until you meet your deductible, you’ll most likely be paying for your doctor’s visit with your credit card and not your insurance card, so it’s imperative you have all the facts before you make that appointment. Be prepared and get to know your HDHP with these commonly asked questions.
1. What is my annual deductible, and what services are covered in my plan?
When you enrolled in your insurance plan, you should have received a “summary of benefits” document outlining all the relevant information about your plan and benefits. If you can’t find this document, you can request a copy from your plan.
To Do: Review your summary of benefits carefully to understand what’s covered and what isn’t, and to know the total amount of your annual deductible.
2. What is my remaining deductible?
Your remaining deductible is the amount you have left to pay before insurance kicks in. If you haven’t been tracking how much you have left before you meet your deductible, your insurer can provide this information.
To Do: Call the number on your insurance card and ask for your remaining deductible.
3. Which services and products do HDHPs typically cover?
Unless otherwise specified in your summary of benefits, HDHPs typically cover just one wellness visit per year. This means that routine medical care like sick visits, prescription drugs, and blood tests or lab work generally aren’t covered until you’ve met your deductible.
To Do: Make a list of the types of health care you typically consume in a year, and be prepared to pay for these services out of pocket or with your health savings account (HSA) card.
4. How much should I expect to pay for health care when paying out of pocket with an HDHP?
First, ask yourself whether you plan to meet your deductible. In other words, if your deductible is $2,500, do you plan on consuming $2,500 or more of health care this year? If not, try to find a provider that has a cash price list, because these prices may be much less expensive than paying through insurance.
For example, One Medical Group offers out-of-pocket payment options for all of our services, at up to 50 percent less than what you would pay using your insurance card, with most visits averaging between $100 to $200. Keep in mind that paying for services with cash instead of your insurance card means that your payments do not count toward meeting your annual deductible.
If you do plan to meet your $2,500 deductible, be prepared to pay anywhere from $300 to 500 for an office visit; these are the rates your insurance plan promised to pay your doctor, and you’re obligated to pay that amount until you’ve met your deductible. The bill will be issued once insurance has approved the claim, about 45 to 60 days after your visit.
To Do: If you don’t plan to meet your deductible, locate a provider that offers out-of-pocket payment options.
5. How else can I save money with an HDHP?
When you have an HDHP, the IRS gives you the option of opening an HSA. An HSA is an account that you can allocate pre-tax dollars to every month–up to $3,300 per individual per year in 2014–for the purpose of paying health care costs. This way, if you need to schedule an unexpected appointment and pay out of pocket it for it, you can use pre-tax money from this account to do so. Unlike money saved in a flexible spending account (FSA), funds in an HSA don’t expire at the end of the year–you’re permitted to rollover and save up money from year to year for potential future health care costs.
To Do: Consider opening an HSA to use pre-tax dollars to pay health care costs.
6. How can I determine whether an HDHP is right for me?
The best way to determine whether you’ll save money by using an HDHP is to estimate a year’s worth of health care costs. Here’s an example:
Next year, let’s say you anticipate going to the doctor once for an annual physical, another time for a sick visit, and you think you’ll have one standard blood draw and lab tests.
HDHP with $2500 Deductible
|Premiums||$400 x 12||$4800|
Traditional PPO with $500 Deductible and $25 co-pay
|Premiums||$600 x 12||$7200|
*Deductible of $500 has been met
If you have more complex needs that make cost planning more difficult, an HDHP might not be for you. For example, if you have a chronic condition, are on prescribed medications, need surgery, have dependents, or even if you plan to become pregnant, it will change your calculations and you might be better off with a traditional plan.
To Do: If your health care needs are straightforward and you don’t have dependents, estimate your yearly health care costs and compare against a traditional health care plan.
Author’s Note: Thanks to Lauren Pollini, who also contributed to this article.