High Deductible Health Care: What You’ll Need to Know

In the good old days (last year and before), my view of the health insurance industry was… ahem… kind of academic. If asked to comment on the future of health care, I might spout CFP® jargon such as “the law of large losses” and “shared responsibility” to explain why I thought costs were so high, but care standards not always as lofty, and why I anticipated an eventual, near-complete transition of the industry to high-deductible health plans (HDHP).

Safely ensconced in a comprehensive health care policy (read: old-fashioned one that actually pays for health care services), that all seemed to make perfect sense. And now that I’ve become a member of the high-deductible crowd, it still pretty much makes sense in the abstract.

But the transition itself has been more than a little baffling, not to mention fraught with financial risk for the unwary. And, oddly, aspects of the experience bore more than a passing resemblance to high school. I hope you’re fortunate enough to never need to know any of this, but here’s what I’ve learned so far.

1. Math is required, and you’ll probably be working with a squishy data set. Ex: Getting consumers to care about health care costs is often touted as a good reason for higher deductibles. Well, yes, but in my experience, some medical offices aren’t yet equipped to answer the question “How much will it cost?” with anything resembling a straight answer.

At one place, I asked “What’s a visit cost? Like $100?” After looking at me like I had 2 heads and engaging in a lengthy consultation with the billing person, the response: “Well, the first visit is more. Then it depends on how many modalities are used & which ones. Each has its own price, and there may be a charge for materials used. And it depends on the insurance company as there may be a discount that applies, yada yada yada.” You guessed it, in the end it was “like $100.”

2. Speaking of “modalities”… Here as in high school, you’ll need to study at least one foreign language. Figuring out how much you’ll actually pay out-of-pocket is like trying to read Les Miserables with high school French. You get the gist from the sprinkling of words like “révolution”, “maladies”, “fatalité”, and “catastrophes” that things are pretty ugly but seeing the show 7 times in English really drives home how big the impact is and why.

With HDHP, it’s language like PPO, deductibles, discounts, copays, coinsurance, etc., that hint at confusing ugliness. Yes, I did learn most of those in CFP® school, but frankly, it’s not until they touch down in your own wallet that their meaning finally becomes crystal clear.

3. “Extracurriculars” are no longer included. At some high schools these days, sports and music programs have been deemed nice but not necessary, and the cost shifted to families. Similarly in a HDHP, services such as chiropractic and massage that might be the key to recovery are not covered. Of course, you can always pay for them yourself BUT then they don’t count towards your deductible. The same is true for services which are covered but not authorized, e.g. in my case, a tenth physical therapy visit.

Some good news: even services that are not covered or authorized by your health plan may be eligible to be paid for with pre-tax dollars from your Health Savings Account (HSA), a companion account to your HDHP. A whole different set of rules applies, as documented in Publication 502 on the IRS site.

4. Like high school, you’ll have to deal with authority figures, arbitrary rules, conflicting information, and unintuitive answers. e.g. Middlemen who deny authorization for service, because you can “perform activities of daily living”. (Um, neck still hurts.) Who then refer you to the insurance company for appeal, which in turn proclaims that only the Middleman can overturn the denial. But not until after 20 minutes of voice response system tail-chasing.

Speaking of counterintuitive, I was slightly taken aback when I started receiving HSA Monthly Status statements despite not yet having an HSA. The statements didn’t say how to open one, but my planner friend Cindee Taradash of CVT Financial Planning suggests these two Web sites: www.hsaadministrators.com and www.hsabank.com.

5. You’ll need to do hours of research,
6. you will be asked to recite a lot from memory, &…
7. a lot of trees will be sacrificed in the process.

Since April Fools’ Day when the problem first occurred (oh sweet irony), I have Googled no fewer than 5 times a day on related topics. I have received many suggestions from friends/family as to what to do and who to see. I have had to write up my entire health history out on at least 5 different forms and received 15+ claim recaps, HSA Monthly Status Reports, authorization/denial letters, appeal requests, and — of course — bills.

Recommendation: Keep good notes!

  • Make a copy the first time you compile your health history, so you can either cut and paste or at least have a cheat sheet the next 4 times it’s needed. These days forms can be downloaded and filled out in advance, so you don’t have to arrive 1/2 hour early & stare at the ceiling trying to remember which year you had plantar fasciitis.
  • Keep an online file for Googled or recommended resources and answers so you don’t have to wrack your brain remembering should the problem linger for months or recur 3 years later. (Yup, speaking from experience again.)
  • Reserve a LARGE file for all your paper records on this particular problem, so that you’ll be able to put your hands on them when you need proof of something. I’m betting you will.

8. There are some unexpected bright spots. e.g. In high school, the teacher that encourages you to submit the essay that wins a prize. In high-deductible, the pharmacist that explains how the system works, saving you $70 for a prescription. (See the New Means Facebook page for more on my new favorite pharmacy or to share the name of yours.)

Of course, the brightest spot of all is getting back to health as quickly as possible. And it is for that purpose that I share this experience. Although you may have detected just the teensiest bit of frustration, it isn’t my intention to bash HSA’s or medical service providers or anybody else. (I know this is a hard problem to solve.) But rather to alert you to the vagaries of the game so that, if you’re stuck playing, you might hopscotch more quickly — and with little financial impact as possible — right on out of it.

About the author

Sherrill St. Germain, CFP®

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