High Deductible Health Plan? It Pays to Shop Around.

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Last updated on July 19, 2018 Comments: 11

This is a guest article by Sara Stanich, a Certified Financial Planner (CFP®) practitioner and Certified Divorce Financial Analyst (CDFA™) based in New York City. Sara is one of four financial experts participating in Consumerism Commentary’s Naked With Cash series. She blogs about financial planning topics at Cultivating Wealth.

In this article, Sara addresses high deductible health plans (HDHPs). I have always had HMO or PPO health insurance, so this article covers new territory for me.

Do you have a new health insurance plan this year? Is it a high deductible plan with a health savings account?

If so, you are not alone. The HDHP market has been growing. According to the National Center for Health Statistics, 30.3% of group health care plan participants were enrolled in a high-deductible plan during the first quarter of 2013, up from 17.1% in 2008.

But not everyone understands how these plans work. So, let’s review the basics.

A high deductible health plan is a health insurance plan with lower premiums and a higher deductible than traditional plans. This means that while your monthly cost for the insurance (the premium) may be lower than with a traditional plan, you will probably spend more out of pocket (your deductible) before your insurance starts to partially cover the cost. Preventive care such as physicals and immunizations may be 100% covered.

At some point (the out of pocket limit), your insurance will cover 100% of your cost. You must check your own policy for the exact amounts that apply for your or your family.

A Health Savings Account (HSA) is a tax-advantaged account that’s paired with a high-deductible health plan (HDHP). This allows you to set aside money for healthcare expenses that are not covered by your plan. This is good news, because contributions are made with pre-tax dollars, so spending on health care may be done with pre-tax dollars, and contributions reduce your taxable income, which may in turn reduce your taxes. (The contribution limit for 2014 is $3,300 for individual and $6,550 for family coverage).

What I think is more interesting than the basic rules, is how this structure may be affecting our decisions surrounding healthcare. The high deductible puts more financial responsibility on the consumer. What is the result?

My story

Recently, I had some pretty bad neck pain. This happens to me from time to time and is probably related to stress or lifting something heavy (like a squirmy kid). After trying ice, a heating pad, and lots of ibuprofen, I decided to break down and call a chiropractor. Actually, I called two.

So I called a chiropractor I had been to before to make an appointment. I know I have a High Deductible Health Plan, and I was pretty sure I would need to pay 100% of the cost out of pocket.

So I asked, “How much will it cost?”

They said I should give them my insurance information, and that they would call the insurance company and let me know. Well, OK.

She called back. I was right; the insurance company will not pay any of the cost.

  • My quote for a consultation and a chiropractic adjustment: $848.00.
  • As a former patient, they could offer me a 50% courtesy discount, so $424.00.

Although I actually have the money in my HSA, this number gave me pause. Maybe my neck wasn’t so bad after all?

I thanked her for looking into it, but said I would try something else. On the way home, I got a 15 minute massage from one of those storefront places for $20, and my neck did feel better.

Fast forward one week. Between long car rides over the holidays and crouching over a laptop on the couch, my neck is worse and the pain is radiating to my shoulder.

I decided to call another chiropractor from my “past.”

They said, “Come on over!”

I said, “Can you tell me roughly what this will cost? I know my insurance has a high deductible and I will be paying out of pocket.”

The answer was evasive as always. “We have a sliding scale. Just come in and we’ll figure it out with the insurance company.”

I didn’t like that answer, but frankly I was so sick of this pain I was ready to just hand over my wallet. So I went, and my back made lots of loud popping noises from many angles. Aaahhhhh… much better.

The price? $75.

I was certainly happy with that number, but what the heck? I had been quoted over ten times as much for essentially the same service. In the same city. On the same street!

I also wondered if they gave me a bargain price because “poor me” had cheapo health insurance. (I can pay; I just don’t want to overpay.) I wasn’t about to argue, and I feel $75 is probably a pretty fair price for 20 minutes of someone’s time.

Lessons learned. Use these tips if you have a new health plan!

  • Understand how your health insurance works. If I hadn’t known and the first chiropractor hadn’t provided an estimate, I could have been presented with a surprise bill of $824.00.
  • Ask questions. Judging by the surprised reaction to my questions, not many of us ask how much it will cost. That makes sense; if I had a $20 copay for everything, would I have even asked about the cost?
  • Shop around. Prices may vary considerably. If you can (and it isn’t a medical emergency), check with two or three options. I went from $848 to $75 for similar service. You may be surprised at what you find.

I am curious about how the expansion of these plans will change the industry. Will pricing become more transparent and competitive? In the meantime, it pays to shop around!

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Sara Stanich and not necessarily those of RJFS or Raymond James. You should discuss any tax matters with the appropriate professional.

Photo: Flickr/planetc1

Article comments

Anonymous says:

It definitely pays to shop around! I can’t believe the difference in the charges for the same service! I know I do presently ignore the total charges for services because I am only paying my copay – I definitely plan on paying closer attention and getting more upfront pricing information.

Anonymous says:

My employer only provides HDHP. They encourage people to use telephone medical services for minor issues. My husband recently called saying he felt like he was coming down with something and was planning on going to the doctor. I encouraged him to use this service which will probably have the same likelihood of getting him the antibiotics he wants at only $38 for the telephone consultation. Of course anything that would require lab tests would probably be beyond the capabilities of a telephone service, but with a simple cold or ear ache or allergy outbreak, this seems like a winning option to me.

Anonymous says:

I can’t believe the huge difference from one doctor to the next. It’s so hard to get into the mentality to shop for things like doctors and healthcare, but it seems like every story I read about people approaching their healthcare the same as other purchases works out much better than people who don’t.

Anonymous says:

Hmmmm….. Maybe the one Doc has been reading Consumerism Commentary, tracking your net worth, and is seeing a deep pocket. The NSA isn’t the only data miner out there. 😉

Anonymous says:

I can’t imagine how a single consult with a chiropractor would cost over $800. Thats really shockingly high. $75 is certainly a much more ‘normal’ bill. I searched online to find example costs and i couldn’t find anyone citing anything above $200 for a new patient consultation.

From what I understand is that medical practitioners don’t really know what insurance will / won’t pay so they may just quote some high value and then end up getting whatever the insurance companies decide. And they cna deal with literally 1000’s of insurance plans so theres no telling how an individual plan will work. It may just be the chiropractiors practice to quote an insane high number then settle for whatever amount insurance says. Thats one guess about what may be happening there. Or that chiropractor may be a rip off or maybe some sort of superstar chiropractor for the rich and famous.

Anonymous says:

I’m glad that you managed to get your neck healed with only $75. It’s great that you shop around and did not settle for that $800 bill. Man, that’s nasty! That’s way too expensive for just a sore neck.

Donna Freedman says:

From one writer to another: Quit crouching over the computer. I’ve been making a living on computers for about 30 years and it’s catching up with me.
Currently suffering from “frozen shoulder” and having to do various painful exercises to thaw it. The impact was cumulative (see “30 years,” above) but I’m pretty sure that poor work habits/stations had a lot to do with it.
Take care of yourself! No one will do it for you.

Anonymous says:

Thanks for the warning, Donna! I know you are right and I try to keep my ergonomics in mind. Good luck with your shoulder!

Anonymous says:

I need this too. So many of us are working with computers that we always tend to forget to straighten our backs when it is needed. But then, this simple action is enough to prevent some illnesses.

Anonymous says:

That is startling and baffling. Nearly $1,000 to nearly $100. That’s actually pretty sickening when you think about it.

I just switched (involuntarily) from a traditional plan to an HSA with the same company. There are a lot of aches and pains I put off, now that I’m footing the bill directly… not logical (I am paying half of what I was before each month) but compelling. It’s why I held off on switching before.

It makes for a good back-door investment account though, if you’re already maxing out 401k and IRA. Not that I am…

Anonymous says:

If only i could find that $5/month plan with a $20 Billion deductible just to use the HSA as an investment.