Even among traditional plan enrollees, 70% now face deductibles.
The share of traditional-plan participants with deductibles rose from 65% to 70% in just one year.<\/li>\n<\/ul>\n
The shift is forcing workers to think less like passive insurance buyers and more like financial risk managers.<\/p>\n
Here\u2019s what experts say workers should consider.<\/p>\n
Don\u2019t evaluate plans based solely on premiums<\/h2>\n
Monthly premiums remain the number many workers focus on during open enrollment. Financial planners say that\u2019s often a mistake.<\/p>\n
Robert Biesiada, certified financial planner with Revolve Wealth Partners, said medical utilization should usually drive the analysis.<\/p>\n
\u201cIf you are an individual that is primarily only seeing medical professionals for preventive care and minor illnesses, a high deductible health plan may make a lot of sense,\u201d Biesiada said.<\/p>\n
He said many high-deductible health plans carry lower premiums than traditional copay plans, and the gap can widen further when employer HSA contributions and tax savings are factored in.<\/p>\n
\u201cThe lower premiums and potential access to a health savings account may significantly offset the higher deductibles,\u201d he said.<\/p>\n
Even households with higher medical costs may benefit in some cases \u201cif the premiums and HSA savings offset the deductibles enough,\u201d he said.<\/p>\n
Michael Angell, associate professor at the College for Financial Planning \u2013 a Kaplan Company, said age and family size should also shape plan selection.<\/p>\n
\u201cAge is a major factor,\u201d Angell said. \u201cA typical 20-year-old generally has different health care needs than a typical 50-year-old.\u201d<\/p>\n
Younger workers may be able to tolerate higher deductibles and lower premiums. That equation changes as healthcare utilization rises later in life.<\/p>\n
Family structure matters too.<\/p>\n
\u201cStatistically, a family of five is more likely to incur medical expenses than a single individual,\u201d Angell said.<\/p>\n
He also said some couples unnecessarily duplicate coverage by both enrolling in employer-sponsored plans.<\/p>\n
\u201cThis can be an unnecessary expense, as one policy is often sufficient to cover the family\u2019s needs,\u201d Angell said.<\/p>\n Experts say workers should evaluate deductibles, out-of-pocket maximums, provider networks, prescription drug costs and employer HSA contributions together, not separately.<\/p>\n Expected healthcare usage is often the best starting point.<\/p>\n \u201cThey should all be reviewed in conjunction with your personal situation,\u201d Biesiada said. \u201cExpected utilization is likely the best starting point.\u201d<\/p>\n Workers also need to assess whether they could realistically absorb a large medical bill if the worst happens.<\/p>\n \u201cA positive cash flow or ample rainy\/sick day fund could allow a buffer for higher than expected medical care,\u201d Biesiada said.<\/p>\n For some households, predictability matters more than minimizing premiums.<\/p>\n \u201cSome folks are choosing to pay higher pretax premiums for copay-type plans for the predictable copays,\u201d he said.<\/p>\n Angell said one of the biggest mistakes consumers make is choosing the lowest-premium option without preparing for the deductible exposure that comes with it.<\/p>\n \u201cA common mistake consumers make is choosing the lowest-premium health plan and simply hoping for the best,\u201d Angell said.<\/p>\n That can become financially dangerous when a major illness or hospitalization occurs.<\/p>\n \u201cWhen a serious medical event occurs, they are unable to pay those out-of-pocket costs and often turn to high-interest credit cards,\u201d Angell said. \u201cThis can begin a downward spiral of unmanageable debt.\u201d<\/p>\n The experts said workers should stop assuming healthcare costs will remain stable from year to year.<\/p>\n Instead, households should model what a bad healthcare year would actually look like financially.<\/p>\n Biesiada said workers should begin with their own medical history and anticipated care needs.<\/p>\n \u201cWorkers should take their personal healthcare history and upcoming care as the guideline as to which plan option may be suitable,\u201d he said.<\/p>\n He also noted that workers can typically reevaluate coverage annually during open enrollment if their needs change.<\/p>\n Angell offered a simple benchmark for financial preparedness.<\/p>\n \u201cHere is a simple test: if you do not have enough money in your HSA to cover your full deductible, your HSA is underfunded,\u201d he said.<\/p>\n Without that reserve, workers may be forced to tap retirement accounts or accumulate high-interest debt during a medical emergency.<\/p>\n \u201cWithout a fully funded HSA, you will most likely be forced to rely on savings, credit cards, or retirement accounts during a medical emergency,\u201d Angell said.<\/p>\n He noted that while some 401(k) withdrawals for medical expenses may avoid early-withdrawal penalties, they generally remain taxable as ordinary income.<\/p>\n Higher deductibles are also changing how workers use healthcare.<\/p>\n \u201cFolks are more aware of potential higher costs and changing their behaviors on how they access care,\u201d Biesiada said.<\/p>\n Telehealth usage has increased partly because of lower costs, he said, and workers are paying closer attention to provider networks.<\/p>\n \u201cPeople are also being very mindful of staying in-network to keep their costs lower,\u201d he said.<\/p>\n Angell said advisers are seeing some workers delay or avoid care because they fear the financial consequences of using their insurance.<\/p>\n \u201cYes, advisers do see this happen,\u201d Angell said.<\/p>\n He said middle-class households often face the greatest pressure because they may not qualify for public assistance yet still lack sufficient reserves to comfortably absorb large deductibles.<\/p>\n \u201cMany middle-class households … are caught in a difficult position: too affluent to qualify for assistance, yet without enough financial reserves to comfortably absorb significant out-of-pocket medical costs,\u201d Angell said.<\/p>\n Workers also make avoidable mistakes during open enrollment.<\/p>\n One common error, Biesiada said, is assuming the most expensive plan automatically provides the best protection.<\/p>\n \u201cDepending on their needs, they may be paying very high costs for benefits they are not utilizing,\u201d he said.<\/p>\n Families may also overlook more cost-effective ways to split coverage between spouses.<\/p>\n \u201cIt may make sense for one employee to stay on a plan by themselves while the other covers the dependents,\u201d Biesiada said. \u201cA family plan may not be the most cost effective.\u201d<\/p>\n Angell said another overlooked gap is disability insurance.<\/p>\n \u201cOne common mistake workers make during open enrollment is failing to also enroll in disability insurance coverage,\u201d he said.<\/p>\n Health insurance may pay medical bills, he noted, but it does not replace lost income if an illness or injury prevents someone from working.<\/p>\n The experts said rising deductibles strengthen the case for larger emergency reserves, more disciplined HSA funding and more conservative assumptions about healthcare costs before Medicare eligibility.<\/p>\n Biesiada said healthcare costs continue rising across the board.<\/p>\n \u201cPremiums, deductibles, and maximum out-of-pocket limits have steadily gone up,\u201d he said.<\/p>\n Angell said HSAs remain one of the most tax-efficient savings tools available.<\/p>\n \u201cPerhaps the best-kept secret about HSAs is that balances can be carried into retirement and used to help cover Medicare out-of-pocket expenses,\u201d he said.<\/p>\n Among the recurring recommendations from advisers:<\/p>\n #health #insurance #protect #finances<\/p>\n","protected":false},"excerpt":{"rendered":" Time was when having health insurance and being financially protected from healthcare costs were the same thing. That\u2019s no longer the case according to a new report, the Employee Benefit… <\/p>\n","protected":false},"author":1,"featured_media":4111,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[168,1071,2943,108],"class_list":["post-4110","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-finances","tag-health","tag-insurance","tag-protect"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/4110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4110"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/4110\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/4111"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMDUxNTk2\/thestreet_52126_insurance.jpg?profile=rss\")
<\/p>\n<\/figure>\nDeductibles aren\u2019t the only number that matters<\/h2>\n
Stress-test the worst-case year<\/h2>\n
Rising deductibles are changing consumer behavior<\/h2>\n
Open enrollment mistakes can become expensive<\/h2>\n
The broader financial lesson<\/h2>\n
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