High Deductibles – What is it the Right Option for You?

 

You should know that high-deductible health plans (HDHPs) are very
important role in the health benefits marketplace today. The
premiums are lower, which allows many employers, especially small
businesses, to provide health benefits to their employees they
might not otherwise be able to afford. HDHPs are one solution to
the growing problem of the uninsured people today. HDHPs help raise
consumer awareness of the real costs of health care, which is
having a positive impact on rising health care costs. Research has
also shown that people tend to take better care of them selves and
go to the doctor less if they have to pay more for it.

With health care costs continuing to rise at double-digit rates
each year, many employers have been forced to reduce benefits. They
shift more cost to employees or drop coverage entirely to save
money. Less than two-thirds of all employers now offer health
insurance to their employees do to the cost to the employer or not
having enough employees for it to be worth it. Employee
contributions to health care costs have increased 126 percent over
the last five years. HDHPs, with their lower premiums; offer
employers an affordable choice when offering health benefits to
their employees, with out it coming out of their pockets.

HDHPs give consumers a larger role in health-care decision-making
and create greater awareness of the rapidly increasing cost of
services and why taking care of your health is very important. With
the exception of many preventive care services, covered employees
must pay the deductible – a preset level of medical expenses –
before most medical expenses are covered by the plan. HDHPs are
often combined with an HSA or a health reimbursement arrangement
(HRA), which help plan members meet their deductibles. These plans
encourage greater cost awareness and responsibility to the insured,
and helps decision-making with the help of consumer information
tools. A recent study found that one out of four employers had
significantly increased either employee premiums or cost sharing at
the point of care in the previous year. The same study found
employers who engaged workers in health care decisions were
significantly more successful at controlling health care costs than
those employers who did less to encourage employee engagement. A
study as far back as the 1970s showed that participants in HDHPs
used 25-30 percent fewer services than those in a no cost plan and
take better care of their health needs.

Aren’t HDHPs really just a means of cost-shifting to save employers
and insurers money? No. Continually rising health care costs pose a
real danger to consumers and the health care system overall. As
costs rise, more employers abandon or reduce health coverage for
their employees, leaving more Americans uninsured. The proportion
of Americans under age 65 with employer health coverage fell from
67 percent in 2001 to 63 percent in 2003, resulting in almost 9
million fewer people with employer-based coverage. High-deductible
plans are more affordable than other types of coverage, allowing
many consumers to obtain or maintain coverage. HDHPs are not for
everyone, but they are an important option in a full range of
benefits offerings now available to the marketplace. It is also
important to remember that high-deductible coverage is typically
offered in conjunction with HSAs or HRAs that help consumers pay a
portion of their deductibles. These consumer-directed plans also
generally feature 100 percent coverage of preventive care and
access to information tools that help consumers navigate the health
care system
.

Do high-deductible plans prevent consumers from getting the care
they need? No. Consumers in HDHPs have the security of knowing they
have coverage for major medical events, and most consumer-directed
plans with a high deductible include 100 percent coverage of
preventive care. Independent research also shows that among people
enrolled in HDHPs who were typical of Americans covered by
employment-based insurance, variation in use of services appeared
to have minimal to no effect on health status. Certainly there are
times when consumers with high deductibles face tough decisions
about whether to access health care services. It is very important,
therefore, that consumers in HDHPs become fully informed about the
choices they face so that they can make the treatment decisions
that are right for them. Will high-deductible plans replace other
health benefits products? While HDHPs plans are an important health
care benefits
option, the marketplace continues to look for a full
complement of health products and services to effectively meet the
needs of today’s employers and consumers, to meet that demand.

DISCLAIMER: This information is for educational and informational
purposes only. The content is not intended to be a substitute for
professional advice. Always seek the advice of a licensed Insurance
Agent or Broker with any questions you may have regarding any
Insurance Matter.

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