Obtaining A Hardship Exemption
The Trump administration expanded access to hardship exemptions in 2018, but many people are unaware that they may now qualify for one. However, obtaining a hardship exemption certificate from the exchange requires completing a lengthy application and several weeks of processing. This can be a challenge, considering that most states limit enrollment to the six-week open enrollment period.
What Is The Main Drawback Of A High
You could potentially be on the hook for expensive out-of-pocket medical costs. You’ll have to meet the deductible in your plan before the plan starts to kick in for covered costs. The plan will pay for preventive medical care such as routine visits and well-baby check-ups, but an accident or unexpected illness could mean thousands of dollars in payments to medical providers.
How Is An Hdhp Different From Other Health Plans
Weve already covered that HDHPs have high deductibles and lower monthly premiums. But HDHPs have other significant distinctions.
Unlike standard healthcare plans, most preventative care is completely covered by the plan in-network. This includes things such as vaccines and your yearly wellness check. Your employees may need to seek out doctors and/or facilities covered by your HDHP, but they dont need to worry about out-of-pocket expenses after they meet their deductible. In fact, until they meet their deductible, it is impossible to use copays for doctors visits or prescriptions.
An HDHP is the only health care plan thats eligible for a Health Savings Account , and its very common for employees to combine the two.
However, the maximum limit on an out-of-pocket cost can be quite expensive if your employees have recurring healthcare costs. In 2021, for example, users on the individual plan have to reach a $7,000 limit and the family plan is $14,000.
Secondly, an HDHP is the only health care plan thats eligible for a Health Savings Account , and its very common for employees to combine the two.
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What Is The Minimum Deductible For An Hdhp
So what exactly is a “higher than average” deductible that causes a plan to be considered a high deductible health plan?
An HDHP is defined by its deductible and its overall out-of-pocket maximum, which is how much you pay out-of-pocket for your deductible, copay and coinsurance before coverage kicks in 100%. Here is what is required of your deductible and out-of-pocket maximum for high deductible health plans:
When It Comes To Health Plans Its Always Facts And Circumstances
As fair warning, none of what you read here should be considered a rule of thumb or as a recommendation of one type of plan over another.
When it comes to health plans, you always need to look at the facts of your specific plan. The premiums, deductibles, out-pocket-maximums, and your employers HSA contribution can totally change the decision from one plan to the next.
Dont assume that a high-deductible plan automatically means that youll pay more out of pocket. Likewise, the premiums for your PPO plan might be similar to, or even less than the, high-deductible plan you might be considering.
Finally, keep in mind that how you use the healthcare you have access to can greatly impact which plan is right for you.
If you visit the doctor frequently, are taking a lot of prescription medications, or expect that you may have a significant medical event on the horizon , you need to carefully consider your options before making a decision.
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Research The Cost Of Your Medicines
Did you know you cut costs on your medicines by researching pharmacies? The cost of medicines can vary from pharmacy to pharmacy. You can also often find savings by ordering through the mail, or getting different amounts .
HealthPartners members: A quick search on our HealthPartners prescription shopping tool can show you which pharmacies offer the drugs you need, for the lowest cost. And you can even transfer your prescriptions to the lower cost pharmacy all online.
List Of The Pros Of A High Deductible Health Plan
1. The monthly premiums for a HDHP are typically lower than other insurance plans. Most households have the premium costs for their health insurance deducted automatically from their paycheck. You cannot use a health savings account to pay for them. When you look at the actual policy costs that you pay each month, you will save about 40% when opting for a high deductible health plan compared to a traditional PPO. Although this option is somewhat of a gamble because a significant medical service or procedure would be costly, most people who are in good health and dont have a chronic illness to manage find that they can save some money.
2. Your out-of-pocket expenses do not occur at the market rate. Although you will be paying the full cost of medical services until you reach the deductibles in your plan, an HDHP does start to save you some money right away. When you work with a network provider for your healthcare needs, then you will get to take advantage of the insurance companys negotiated rates for each service instead of paying the market rates for what you receive. This advantage can save you upwards of 30% for many services, and sometimes up to 50% if you must receive specialist care.
Any earnings that you achieve through your HSA account is tax free, as are the withdrawals that you make from the account when using it for qualified medical expenses.
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Are You Eligible For An Hsa
If your insurance policy is considered an HDHP under the IRS, then you may be eligible to contribute to an HSA. Not all high-deductible policies are HSA-eligible, though some HDHP insurance carriers offer HSAs, some dont.
To be HSA-compatible, an HDHP must include all expenses under one deductible. Some high-deductible plans, for example, arent eligible because they have a separate deductible for prescription drug costs. If youre unsure whether your plan is HSA-eligible, ask your insurer or employer. With some plans, HSA eligibility is not immediately evident. It can be hard to figure out whether or not a plan is HSA-eligible, particularly if youre purchasing insurance through the state exchanges.
To Qualify for a Health Savings Account :
Minimum Deductibles And Maximum Out
HDHPs have specific guidelines in terms of allowable deductibles and out-of-pocket costs. These are adjusted annually by the IRS, although there have been some years when there were no changes.
For 2020 coverage, HDHPs must have deductibles of at least $1,400 and out-of-pocket caps that dont exceed $6,900 . Note that this is lower than the total out-of-pocket allowed on non-HDHPs under the ACA the gap between the maximum allowable out-of-pocket limit for HDHPs versus other health plans has been steadily widening since the ACA was implemented.
For 2021, the minimum deductibles for HDHPs are unchanged , but the maximum allowable out-of-pocket caps will increase to $7,000 for an individual and $14,000 for a family.
But not all plans that fall within these dollar limit guidelines are HDHPs, since HDHPs are also required to only cover non-preventive services after the enrollee has met the deductible.
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Key Points To Remember With Cdhps And Hdhps
Although deductibles can be very high with these healthcare coverage options in the United States, it can be an effective form of care for some households. Once the deductible demands have been met for the year, most CDHPs and HDHPs will pay 100% of the allowable amount for the care that is provided for the remainder of the calendar year.
There are in-network services which may be provided with a copay, or at zero expense, even though the high deductible has not been met. Annual checkups are often covered under this stipulation. Health maintenance needs for children, like scheduled vaccinations, flu shots, and sports physicals may be included outside of the high deductible requirements as well.
It is the non-preventative healthcare needs which CDHPs and HDHPs do not initially cover.
If you use HSAs with your healthcare plans, then you can withdraw from them for items other than a qualified medical expense. If youre under the age of 65 when you do this, however, the funds withdrawn will be subject to a penalty tax and the money will count toward your overall income for the year.
HSAs are portable, so even if you switch to another plan, the funds will not go away. You may also qualify for certain health reimbursement arrangements if you do not qualify for HSAs under these high deductible plans.
How Do Hdhp Premiums Compare To Other Plans
In terms of premiums, HDHPs are usually among the lower-cost plans available in a given area, but theyre typically not the least expensive plans. Thats because the rules that govern maximum out-of-pocket costs for HDHPs are different from the rules that govern maximum out-of-pocket costs for all ACA-compliant plans. In 2014, the two were equal: the maximum allowable out-of-pocket for HDHPs was $6,350 for an individual and $12,700 for a family, and those were the same limits that applied to all ACA-compliant plans. So in that year, HDHPs were among the least expensive plans available.
But as time went on, the limits that apply to all ACA-compliant plans climbed faster than the limits that apply to HDHPs. For 2020, HDHPs can have a maximum out-of-pocket of $6,900 for an individual and $13,800 for a family. But the 2020 upper limit for out-of-pocket costs on ACA-compliant plans is $8,150 for an individual, and $16,300 for a family. So there are non-HDHP plans available that have higher out-of-pocket exposure than HDHPs.
This gap will continue to widen in 2021: The upper limit on out-of-pocket costs for HDHPs will be $7,000 for an individual and $14,000 for a family, but the maximum out-of-pocket caps for all other plans will increase to $8,550 for a single person and $17,100 for a family.
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Highlights That Are Special To Hdhp
GEHA supplemental benefits are neither offered nor guaranteed under contract with the FEHB, but are made available to all enrollees and family members who become members of a GEHA medical plan. For information on year-round savings for GEHAdental members, visit Savings for GEHA dental members.
This is a brief description of the features of the GEHA High Deductible Health Plan . Before making a final decision, please read the Plans Federal brochure RI 71-014.All benefits are subject to the definitions, limitations and exclusions set forth in the Federal brochure.
The Benefits Of Using An Hsa
There are many benefits to using an HSA:
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Among Adults Aged 1864 With Employment
- Among adults aged 1864 with employment-based coverage, the percentage enrolled in a traditional plan decreased from 85.1% in 2007 to 56.6% in 2017 .
- The percentage enrolled in an HDHP without an HSA increased from 10.6% in 2007 to 24.5% in 2017 among adults aged 1864 with employment-based coverage.
- Among adults aged 1864 with employment-based coverage, the percentage enrolled in an HDHP with an HSA increased from 4.2% in 2007 to 18.9% in 2017.
Figure 1. Percentage of adults aged 1864 with employment-based coverage, by type of private coverage and year: United States, 20072017
1Significant linear decrease from 2007 through 2017 .2Significant linear increase from 2007 through 2017 .NOTES: HDHP is a high-deductible health plan. HSA is a health savings account. Estimates are based on household interviews of a sample of the civilian noninstitutionalized population. Due to rounding, percentages may not add up to 100 within each year. Access data table for Figure 1pdf icon.SOURCE: NCHS, National Health Interview Survey, 2017
Disadvantages Of A High Deductible Health Plan
As much as we like HDHPs, theyre not for everyone. If you or someone in your family suffers from a chronic medical condition, an HDHP might not be your best option. Thats because to ensure you get the care you need, you could end up spending a lot of time and money inside doctors offices, while getting little or no financial advantage from your health insurance.
Lets look at Joe. He has an HDHP with a family deductible of $3,000 and pays $300 monthly premiums. Joe and his wife spend $500 a month to keep a handle on their young sons asthma.
Heres how the annual breakdown of medical costs looks for Joes family:
- Theyll pay a total of $3,600 to cover premiums
- Theyll pay in the neighborhood of $3,750 in doctor visits and medicine by the end of the year.
- Their grand total will be around $7,350 for the year.
See the problem here? This could end up costing Joe a similar amount, or even more than what he might pay in a traditional plan. At the same time, he wont begin to have any help from his insurance until midyear.
In cases like Joes, it might be worth looking into a plan with higher premiums and a lower deductible. That combo could help you save money by shifting some of the cost to your health plan earlier in the year.
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List Of The Cons Of A High Deductible Health Plan
1. Some families avoid seeking medical treatment because of the deductible cost. Employees often feel that a high deductible health plan forces them to spend more money at first because they must meet specific obligations before the full benefits begin to kick-in for them. This disadvantage is true to some extent, even when you factor in premium reductions that occur with this option. If you know that there is a $1,300 bill you must pay at the first of the year if you were to visit the ER for an injury, then there is a greater chance that you would decide to skip treatment, especially if you dont have the money available to cover the costs right away.
The University of California-Berkeley and Harvard Research found that when one large employer switched to only HDHP options, medical spending dropped by 13% because workers stopped accessing care services.
3. Everything is an out-of-pocket expense until you meet the deductible. There are some exceptions to this disadvantage, such as a doctors appointment for a child to receive a vaccination. For most everything else, all of your prescriptions, diagnostic tests, medical appointments, and other medical interactions are all expenses that you must cover until you reach your deductible.
Data Source And Methods
NHIS is a nationally representative survey of the civilian noninstitutionalized U.S. population that is conducted continuously throughout the year by the National Center for Health Statistics . NHIS is an in-person interview conducted in the respondents home. In some instances, follow-up to complete the interview is conducted via telephone.
NHIS is designed to yield a nationally representative sample, and these analyses used weights to produce national estimates that are representative of the civilian noninstitutionalized population of the United States. Point estimates and the corresponding variances were calculated using SUDAAN software to account for the complex sample design of NHIS. All estimates in this report meet NCHS standards of reliability as specified in National Center for Health Statistics Data Presentation Standards for Proportions . Linear trends by year, family income level, and educational attainment were evaluated using logistic regression. Differences between percentages were evaluated using two-sided significance tests at the 0.05 level.
Data analysis for 2017 was based on information collected on 46,688 adults aged 1864 in the NHIS Family Core component. Visit the NHIS website for more information about the design, content, and use of NHIS.
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High Deductible Health Plans And Health Savings Accounts
Healthcare expenditures are a large component of the average household budget in The United States. While household healthcare insurance expenditures nearly doubled between 2010 and 2018 , employer healthcare costs increased by 22.3 percent.
This factsheet highlights High Deductible Health Plans and Health Savings Accounts estimates for private industry workers from the National Compensation Survey .
The availability of HDHPs for private industry workers participating in medical care plans increased from 24 percent in 2010 to 45 percent in 2018.
HDHPs typically have higher deductibles and lower premiums than traditional health plans. In 2018, the median annual deductible for private industry workers participating in HDHP plans was $2,000.00. For private industry workers participating in non-HDHP plans, 16 percent did not have a deductible. For the 84 percent with a deductible the median annual deductible was $500.00.
HDHPs allow workers to establish Health Savings Accounts , which are employee-owned and used to pay for medical expenses with pretax contributions. Additionally, HSAs may earn tax-free interest and unused contributions roll over from year to year.