Last week, we talked about traditional copay style insurance. All caught up? Great.
Now let’s compare that to the moving parts we’ll find in a high-deductible health insurance plan:
- Deductible – Just like before, this is the amount of medical expenses the insured will have to pay before the insurance company starts picking up their share of the tab. Like the name implies, a HDHP will have a higher deductible than a copay-style plan.
No, really. That’s it. Your client’s got a deductible. If they haven’t met their deductible, then they pay their medical bills. If you have, then the insurance company pays the bills. All of them. Prescriptions, office visits, surgeries – if it’s covered by insurance, then it’s covered 100% after that deductible is met.
There are three main things to remember with a high-deductible health insurance plan:
- Keep it simple. Has your client met their deductible? If not, then they’ll pay the full cost for things like doctor’s visits, x-rays and prescriptions until they do. If they’ve already met it, then the insurance company will cover the tab.
- Upfront medical costs are higher. There is a downside to the HDHP concept, and this is it. With a copay style plan, your client will know exactly how much an office visit will cost them before they set foot in the doctor’s office. With a HDHP, they’ll get a bill for the full cost of the visit after the fact. It’s important to note that your client will not be paying retail for their medical care. If your client needs medical care with a HDHP and they haven’t yet met their deductible, the bill they will receive will be for the amount the insurance company would have reimbursed the medical provider. In other words, your client may not have a copay, but they’ll get to participate in the huge discounts that insurance companies have negotiated with doctors, hospitals, and pharmacies.
- Long-term costs are lower. Financially, HDHPs make sense. We’ll examine why and do a detailed comparison in next week’s installment.