How can you make a high deductible health insurance plan work for you?

Check your policy; our high deductible plan ($2700) includes 100% coverage for ‘maintenance’ health care. Our exams, mammograms, and other preventative programs are covered.

Also, see what HSA plans are available to you. Ours rolls over each year, so if I can save $2700 (pre-tax) and am healthy all year, I’m still good the next.

Otherwise, any procedures that you’ve been considering for a while should happen at the beginning of your year to meet the deductible, then the rest of the year is covered.

Thank you. The plan does have the HSA, as I described it above and it does roll over each year, but as I mentioned, the cost of one prescription I must have alone eats up the entire monthly HSA contribution made by my employer and I can’t afford to contribute much to it myself. I will check the policy more closely to see what maintenance items are covered. Thanks for mentioning that! I don’t actually have coverage until January. For now, I’m uninsured.

Since this is a new plan, I believe your insurance must fully cover preventive care under the ACA. Annual checkups, certain tests like mammograms, birth control, and I’m not sure what else, are now required to be covered. So, don’t worry about that.

If you haven’t already you should at least get a quote through the health exchange. Depending on where you live, your age, and your income, you might be able to get a better plan with fewer out of pocket expenses. Or the insurance through your job could be better. Either way, at least you have options.

We have high deductible insurance because it’s all we can afford and are self employed. I just remind myself that the purpose of the insurance is to keep up from crushing debt if someone is seriously sick or injured. The insurance never did anything for us at all until the well visits were covered so at least that’s something.

Having a high deductible health insurance plan is the same as self insuring for the little things and having the insurance available for catastrophic illness. I have been a Certified Financial Planner for over 20 years, and just when you feel that you don’t need insurance is when you are hit with something that can wipe you out. Don’t forget that injuries as a result of an auto accident can be just as debilitating as an illness.

As mentioned in the previous answer, check to see what is provided that does not fall under the deductible.

Remember also your out of pocket medical costs are tax deductible to the extent that they exceed 10% of adjusted gross income. You premiums are not tax deductible since they are paid on a before tax basis.

Not sure if your company has a 401(k) plan, but if so, you may consider putting a little less in the 401(k) and use the difference to cover the premiums. Saving for retirement is very important, but, if you are sick and can’t work, you can’t save for retirement anyway.

I have a high deductible and HSA. Usually this type of plan is much cheaper monthly than HMO’s and PPO’s, are you comparing to those types of plans? I know you said your company offers nothing else, but I am assuming you are coming from a company that had other offerings since this type of plan is new to you. The HSA is before tax, so the $120 your company puts in is worth more than if they gave it to you in salary. If there is any way you can add more money to your HSA I would, because of the tax benefit.

Under this plan your medicine might be a different price than previously, have you checked the price with the plan you have now? Also, most of these plans have a mailorder pharmacy plan that is almost always less expensive if you are not using mailorder already. Often you can get 90 days of medicine via mailorder.

If you think it is extremely unlikely you will use up your deductible you can ask about self pay for doctors visits and lab tests and medicine. Often doctor’s visits are less expensive if you self pay, lab tests like blood work it is a crap shoot, and diagnostics like CT scans are many times significantly cheaper doing self pay. When you self pay, the payment you make will not go towards your deductible so it is a risk.

Medicine typically is not cheaper by self pay, but it’s worth asking. If you have a small drug store near you that is not part of the national chains, sometimes the owner/pharmacist can give you a better deal.

Also, I agree with @Wealthadvisor about directing more money into your HSA even if it means less into a 401k. HSA accounts the money stays in there year to year if you don’t use it (unlike FSA’s where you lost the money at the end of the year which I think is criminal and disgusting) and the tax deferred money can sit there until retirement and taxed at a lower amount similar to a 401k when you withdraw the money assuming you are at a lower tax bracket then. If you retire young, you can continue to use your HSA money you have built up with tax deferred money for medical necessities without any penalty.

Oh, I forgot to add that if self pay is cheaper for a doctor’s visit, you should be able to still use your HSA savings. Sounds like you will have a $20 surplus every month if you put in $50 yourself, so if you only see a doctor maybe twice a year, you might do fine. You can push you annual GYN visit a month or two out, assuming you have no reason to be concerned about a two month delay, and kitty up money longer. The bill doesn’t come til after the visit usually. The high deductible kind of forces people to pay a little more attention to what tests are being run. Doctors will just run all sorts of tests without worry if insurance “covers” it. That is part of the problem with our system. Insurance companies paying medical professionals, but the final pocket it all comes out of is ours in high premiums. HMO’s are probably to blame the most for extremely high medical costs in America. Patients had zero idea how much services cost. But, this high deductible plan doesn’t cure the whole problem unfortunately.

The biggest problem is if God forbid you get hospitalized or need to go to the ER. But, even in that case usually hospitals will let you pay some low monthly amount until you pay the bill. Even in the hospital watch over tests and unnecessary things that they will charge you for. People in the hospital don’t think about patient costs at all from my experience.

Thank you all. All of these answers have been very helpful. I may consider putting more into the HSA and a little less into my 401(k). I’m already 50, so retiring young isn’t an option (I wish), and I’ll probably never be able to afford to retire.

I’m not qualified to join the 401(k) plan here until July 2014 since you can only enroll in January or July after 6 months of employment (I started in October), but I have my own IRA that I rolled over my previous employer’s 401(k) into and that I contribute too.

I don’t have to pay the premium for the insurance. It’s 100% paid by the firm since I’m single and my dependents won’t be on this plan. It is nice to know the out of pocket expenses are tax deductible though. Thanks for alerting me to that.

Also, I did confirm with the Office Administrator that preventative care has a simple $20 co-payment, so that is a HUGE relief. Unless something major happens (knock wood) that means my regular yearly exam won’t be a problem.

I’m coming from a history of having regular health insurance that was 100% employer paid. So, I’ve always had a basic $35 or $50 co-pay for office visits, a straight 80/20% for major stuff and my prescription co-pays were only $15/$25/$50 depending on the level of the drug. It’s a very different situation to get familiar with.

I have one. The best way is to not go to the doctor for things like a sore throat or runny nose, or anything that goes away by itself. Check out WebMD. Your HSA is a good way to save up the deductible.
I self pay for doc visits anyway.
The high deductible is for when the shit really hits the fan.

The biggest problem with this plan is that the cost of my daily Rx will eat up the entire $120 (plus $30 more dollars) that my firm puts on my HSA card each month. I can’t not take the medication (not an option), so I really won’t have any money in my HSA account the way I could if I was able to hold off on seeing a doctor or filling any prescriptions for a couple of months to let the money build up. It’s hard, because with my previous insurance, that prescription only cost me $15 a month.

That’s the biggest issue I have with this insurance. That I have that one really expensive medication. It’s the monkey wrench. I am checking with AARP to see if I can use their discount in addition to the Walgreen’s Prescription Savings card I have. If I didn’t have that Walgreen’s card, the Rx would cost me even more than $150 a month. It’s been well worth paying a yearly fee for. It also gave me a big discount on my migraine medication when my old insurance wouldn’t cover the full amount of pills my doctor prescribed and I had to buy the remainder of the refill out of pocket.

It also pretty much sucks that I’m uninsured until January. I couldn’t afford to COBRA my old insurance to cover me for November and December until my new plan kicks in, so I had to refill my prescription using a credit card since I can’t afford it otherwise. Same thing next month. :(

@Thebunneh Ok, but you $50 copay previously you had to earn $70 (more or less depending on your tax bracket) to have $50 in your pocket. Now, the entire $70 is in your HSA plan to pay for all qualified medical expenses.

Also, I remembered that when you switch to an HSA you have a one time exemption to rollover some money from your 401k no penalty (maybe IRA’s also, I am not sure) unless that has changed. So, you could move a few hundred in the HSA to feel better about having a cushion. If I were you I move a good $1,000, you can always adjust your contributions later if the account is building up. You will need to check me on this, check the details and if they still allow the rollover. It has to be done within the first year for sure, but maybe the window is tighter, like within days or weeks of enrollment I have no idea. I hate for you to miss the window if you want to utilize it.

Also, you can start pulling the money out of the HSA without penalty at age 65 I think. Not 591/2 like some other accounts. But, double check me on that too. I’m not an expert, just a regular ol’ person hating the health system. LOL.

The tax deduction @Wealthadvisor mentioned will not likely apply to you. Your medical expenses won’t be high enough. I don’t know your salary, but I would guess your medical expenses won’t be 10% of your income if you don’t think you will use up the deductible.

She may qualify for the medical tax deduction if she itemizes. Since we do not her income or if she uses the 1040 or 1040A.

$30,000 of income with an AGI of $26,000, means she only needs $2,600 of medical expense to start taking a deduction. While she may not qualify now, she may in the future. It is just a point to keep in mind.

@JLeslie, I’m not sure moving money from my 401(k) to the HSA would have worked in this situation, since I didn’t switch plans while working at the same employer. This is a new job entirely and I don’t have a 401(k) here yet and won’t until July. I’ve already completed the rollover of the funds from my old work 401(k) to my personal IRA account (because I had nowhere else to roll them to since I can’t join the new firm’s 401(k) plan until July 2014), so that ship has already sailed as well. If I tried to do that now, I’m sure I’d get hit with a penalty. Also, my new insurance and the HSA won’t go into effect until January, so my rollover will be relatively ancient history by then.

The copay on my prescription, which is still the primary source of my concern, was $15 not $50. Now I pay $150 out of pocket for it, which is the root of the issue I have with this HSA. Having to use the entire amount my firm pays into my HSA each month to pay for that one, single prescription (plus an additional $30 from my pocket), means I’ll never be able to build up the balance in the HSA. Not unless I get a bonus or some other windfall that I can put into it.

@Wealthadvisor Thank you for that additional detail. Whether I itemize or not depends on a number of variables. As you said, it’s a point to keep in mind in case it’s a year when itemizing is better than taking the standard deduction. I might not have thought about that until you mentioned it. :)

(Not reading the answers yet)

My plan is a high-deductible with HSA and it works for us very well.

Most annuals (like paps & mammograms) are paid 100% and there are little co-pays for visits. Since my husband has some health issues, the only bills we have are a couple for him each year, and they don’t really harass you until a year after the service, so you can always pay with your HSA if they give you enough or you can add more.

Remember that any money you can transfer to your HSA is tax-deductible.

You also should have a 401k that you add to, at least as much as your employer matches, and an IRA at a bank or cu, which will be tax deductible in 2014.

If you work hard to get all your deductions, you can transfer that return money to your HSA or to pay medical bills.

*On prescriptions, you can also talk to your pharmacist about cheaper options and email your doctor, and they can change it for you. I did this with my cholesterol medication.

You can do it from your IRA once in your lifetime with no penalty. Here is a link.

@JLeslie The link was broken, but I was able to search Kiplinger’s and find the article. Thanks for that. I’ll just have to wait until my HSA account is actually active in January. Then I believe I will do that.

@KNOWITALL I’m already using the cheapest option for the medication.

@Thebunneh I always find it dissappoiinting that the benefits/HR people at places of employment don’t help new employees with that sort of information. A lot of them are not even aware of the information, which maybe is even more annoying to me. They should know the basics for the concerns new employees have, and people who switch health plans.

@Thebunneh I hate to say it, but the only other cheap options for some meds are WalMarts. Ugh.