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Why Is Your Deductible So High?

As we move past the emergency phase of the COVID-19 pandemic, it’s tough to predict how much health care costs will increase. But one thing most experts agree on is that costs will indeed go up, anywhere between 4% to 10%. Prescription drug spending is also expected to rise.

Rising health care costs

Health care spending in the U.S. reached $4.3 trillion in 2021, according to the most recent data available from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS). That equals a staggering $12,914 per person.

Growing benefits costs

According to the National Compensation Survey’s Employer Costs for Employee Compensation (ECEC) report, employee health care costs rose 14.6% from 2004 to 2018. When you add in life insurance, disability, paid time off, retirement and legally required benefits such as Social Security and unemployment insurance, most employers have seen an overall increase of 368% in total employee benefit costs.

Premiums increasing at a level rate

The average employee contributes approximately 7% of U.S. median income to pay for health care coverage. The federal Medical Expenditure Panel Survey – Insurance Component (MEPS-IC) shows this is a relatively flat increase, up from about 5% in 2008.

But out-of-pocket expenses are growing exponentially

While you may have noticed a slight increase in monthly premiums, you have probably seen your own out- of-pocket costs escalate. According to the most recent numbers from the CMS, Americans spend $365 billion on deductibles every year.

Employers and insurance companies have worked to keep premiums low. Part of controlling the cost of coverage is making changes to how the plan is designed. Plans with higher deductibles are called consumer-driven health plans. That’s because the insurance carrier is hoping you will take on the responsibility of finding the best care at the best price. They want you to share the responsibility of paying for care and help them control costs.

But that’s not always as easy as it sounds.

Employees are struggling

The Kaiser Family Foundation reports that four out of 10 employees enrolled in a high-deductible health plan don’t have enough savings to cover the deductible. Half of survey respondents said costs have forced them or a close family member to delay care.

There are a number of ways you can work with your employer to help them make the most of your benefit dollars.

  • If you are enrolled in a qualified high-deductible health plan, contribute to a health savings account (HSA). Try to contribute the full deductible amount or as much as you expect to spend on health care this year. This will reduce your taxable income and help you save for any unexpected health care expenses. Remember, any money withdrawn from your HSA for eligible expenses is not taxed.
  • Work with your insurance company to find high-value providers in your area. Looking for a provider takes a lot of time. Ask your health insurance company for information about the providers in your area that have the most reasonable costs and the best outcomes. Most insurance companies have a cost comparison tool on their website that you can use free of charge.
  • If your employer already offers savings for high-value providers, take advantage of the program. These providers have the best results at the most competitive cost.
  • Use telehealth and other virtual health care services, where available. Telemedicine is often cheaper than an in-person visit with a health care or mental health provider. You can make appointments that don’t require you to leave the house or sit in a waiting room.

Talk to your human resources department or benefits administrator about rising costs in your area. They are your best resource when it comes to learning more about saving money on health care.

By Applied Systems, Inc.

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