For some across the nation, the Affordable Care Act rendered medical care less affordable. How did this result come to be? When you combine the cost of the health insurance with the expenses that consumers still have to pay themselves, i.e., premiums, deductibles, coinsurance, etc., many people do not see an immediate benefit through their insurance. That leads many people to avoid going to a doctor, since they will have to pay for it themselves out of pocket. This is why supplemental health insurance can be so important to so many people.
Unfortunately, putting off consulting a doctor until you are very ill can often result in medical treatment costs being even higher. What began as a minor ailment or condition can escalate over time to something more serious and costly to treat.
There are many reasons people need supplemental health insurance. Most often, supplemental health insurance can provide the safety net and peace of mind that you need to assure that you have the full range of financial protection for many different types of injury and illness situations.
Understanding Health Insurance Costs
It’s important to understand that the total cost of health care insurance includes a number of factors:
- Premium cost for health insurance
- Deductibles and copays when you actually utilize medical care
- Coinsurance that may kick in after you’ve met your deductible
The Affordable Care Act has set limits for what you can spend on health care during a period on your policy: Your out-of-pocket maximum. The Department of Health and Human Services (HHS) in Washington, D.C., sets this maximum each year, and HHS has been increasing this maximum every year. That means the costs and the gap in coverage for most consumers increases each year.
In the last 3 years, HHS has steadily increased the out-of-pocket maximums each year by a total of 12 percent. Here are the numbers:
2014 Out-of-pocket Maximums:
$6,350 – Individual
$12,700 – Family
2015 Out-of-pocket Maximums:
$6,600 – Individual
$13,200 – Family
2016 Out-of-pocket Maximums:
$6,850 – Individual
$13,700 – Family
2017 Out-of-pocket Maximums:
$7,150 – Individual
$14,300 – Family
That’s an increase in the deductible in just 3 years of:
$800 for Individuals
$1,600 for Families
Over 12.5 percent higher than just 3 years ago.
For helpful reference, here are definitions and more information on the terms deductible, coinsurance, copayments and maximum out-of-pocket spend:
Deductible: Before your health insurance company will begin paying for most health care services, you must meet your medical deductible. This deductible may be thousands of dollars. If you see a specialist and go to the hospital once a year, paying more each month for a health care plan with a lower deductible could reduce your overall out-of-pocket expenses during the year. If you are healthy and only use preventive services, which are covered 100 percent by your insurance carrier, enrolling in a lower-cost, higher-deductible plan could help your overall budget.
Coinsurance: After your deductible is met, you are not off the hook. You and your health insurance company will be paying “coinsurance.” That means your carrier is responsible for a percentage of the covered medical bills and you also are responsible for a percentage of the covered medical bills. If you have an 80/20 plan, for example, your insurance company will pay 80 percent of the covered medical expenses after your deductible is met, and you are responsible for paying the remaining 20 percent.
Copayments, RX drug deductibles: Other out-of-pocket expenses include physician copays and prescription drug deductibles.
Out-of-pocket maximum: After you meet your deductible amount and you are paying your percentage of coinsurance, you may reach a maximum amount that you will need to pay for covered medical care before the health insurance company begins to pay 100 percent. This number is an important factor, especially if you have an unexpected serious illness or injury.
Bonus: these terms will also help you understand your health insurance company’s explanation of benefits (EOB).
High Deductibles Make It Difficult to Have Affordable Health Insurance
If you don’t have more than $7,000 (or over $14,000 for a family) in the bank or some other type of savings, or you don’t have that much available credit on your credit cards, it’s understandable that you might put off medical care when you can. In fact, you’ve probably wondered: how will I pay my plan deductible when they charge so much money up front?
The Commonwealth Fund, a private nonpartisan foundation that supports independent research on health and social issues, found in its study that:
- 40 percent of privately insured, working-age Americans with deductibles of at least 5 percent of their income delayed or avoided medical care due to their high deductible.
- Almost 30 percent of these people decided to skip their doctor-recommended medical tests, treatments or follow-ups.
- Over 40 percent of all income groups in this study said it was difficult or impossible to afford their deductible.
SERMO, the leading social network for fully verified, licensed doctors in the U.S. and globally, surveyed its members in November 2015. The survey found that 76 percent said that the increase in patient cost-sharing — higher deductibles, copays, etc. — had an impact on patients putting off going to the doctor or skipping procedures they felt were too expensive.
So it comes down to this: It’s a toss-up:
- Risk your physical health by not getting medical care that you need
- Risk your financial health by getting care and paying a lot out of pocket
An Example of the Added Cost of Delaying Health Care
You probably know of people who have delayed care and ended up paying a heavy price—either because their ailment had progressed too far or the treatment costs increased with greater severity of the illness. Here’s a typical story, this one reported by MPR News (Minnesota Public Radio) in February 2015. It centers around a 49-year-old woman who had gastrointestinal bleeding and delayed seeking medical care because of her deductible.
This woman was the mother of three children and was a Girl Scout leader living in an affluent area. She had health insurance, but she was convinced that her problem was not cancer, so she put off going to the doctor for months. She thought she would save money by waiting until after the first of the year.
Unfortunately, when she finally did seek medical care and testing, she was diagnosed with stage three cancer. Her subsequent surgeries and chemotherapy were successful, and seven years later, she was still cancer free. However, she knows that all of the medical treatment she endured would have been much easier and less of an ordeal if the cancer had been diagnosed and treated sooner.
She said later that she knew something was wrong, but she put off health care because she thought she would be saving money. In the end, she did not save money; her more extensive treatment may have cost more than it would have earlier.
This woman has committed to never put off health care that she knows she needs because of a deductible or out-of-pocket costs.
Supplemental Health Insurance Reduces Your Burden
So how do you afford both your health insurance premiums and your costs for health care? In many cases, the best and easiest way is to purchase supplemental health insurance. And here’s why:
Supplemental health insurance pays benefits for sickness and accident that coordinate with your major medical plan or pay IN ADDITION TO any other coverage you have—to help fill the out-of-pocket gaps in your coverage.
Insurance benefits can be used for:
- Medical deductible or coinsurance
- Rent or mortgage
- Car payments
- Child care
- Everyday living expenses
Because supplemental insurance policies generally pay benefits directly to you, that means you can use the funds wherever you need them most.
Even if you do not have major medical insurance coverage, you can purchase one of these supplemental plans and have coverage that is focused on medical events that usually have the highest-cost instances: accidents and serious illnesses.
And, in many cases, supplemental insurance coverages are packaged with other health care-related services and discounts that can save you even more money on everyday medical care.
Innovative Ways to Fill Health Insurance Gaps
Just because you have a health insurance plan with a high deductible doesn’t mean you cannot add coverage and packages that provide you with more complete financial protection.
Here are some practical tips:
- Purchase a supplemental health insurance plan that helps cover the gaps in your high deductible health insurance.
- With supplemental health insurance coverage, you may be able to switch to a higher deductible, since you have a safety net of supplemental protection.
- Consider low-cost health care alternatives: See if your plan offers access to telehealth or telemedicine services. This may be phone or video access to a doctor or a nurse triage call service.
- If you have access to telemedicine, you can receive medical consultation and, in many cases, have a prescription sent to your local pharmacy.
- With a nurse triage call, you can receive guidance on whether an issue is serious enough to warrant a visit to the doctor.
So, before you decide to put off contacting a doctor for that ache or pain that’s been bothering you, or another physical change, consider how you can reduce your cost and increase your peace of mind with supplemental health insurance.