When we first switched to an HSA qualified health insurance policy in 2007, we had a $3000 family deductible (our family back then was just my husband and myself). In 2009, we raised our deductible to $5000 in order to reduce our monthly premiums, after a couple of years of rate increases. Now we’re doing it again, and raising our deductible to $7000.
After we added our second son to our policy this spring, the premiums climbed to $573/month for our $5000 deductible policy. We looked at options with other carriers, but there were no better deals available. So we decided to see if raising our deductible again would make sense. The new premium will be $438/month, which means we’ll save $135/month, or $1620/year. The trade off is that our potential out-of-pocket exposure will be increasing by $2000/year.
That’s a trade that I’m happy to make. In the last decade, we’ve only used our health insurance twice, other than routine physicals. My husband had knee surgery in 2008 (the only time we’ve ever met our deductible), and our son had to have stitches last year. The stitches incident came to $1400, which we had to pay in full since our deductible was $5000 (we now have an accident supplement that will reimburse us up to $5000 if we have a claim that is a result of an accident or injury).
We’re a pretty healthy bunch, and our track record of not needing to use our health insurance is pretty good. Of course, nobody knows what tomorrow will bring, which is why I would never go without insurance. But chances are, we’ll come out ahead with our new deductible. Here’s the way we look at it: If we keep our $5000 deductible, we’re guaranteed to have to spend that extra $1620/year in premiums, and we might save $2000… if we have a claim that is more than $5000 (a claim that’s less than $5k would be the same either way – we’d be paying for it ourselves with either plan). If we go up to the $7000 deductible, we’re guaranteed to save the $1620/year, and we might have to spend an extra $2000… if we have a claim that is more than $5k. Given how close $1620 is to $2000, I’ll take the option that guarantees us the savings rather than the option that guarantees that we’ll be spending the money.
We’ve been contributing to our HSA ever since we opened it in 2007, so we do have the money to cover the deductible. If we didn’t, this would be a different story. And higher deductibles don’t always make sense – you have to crunch to numbers and see if they make sense. If you’re only going to save $200 a year for increasing your deductible by $2000, you’d have to go ten years without meeting your deductible in order to come out ahead. But in this case, as long as we don’t end up having to meet our deductible every single year, we’ll come out ahead.
So as of July, we have a $7000 deductible, and our premiums will drop to $438 a month. What do you pay for health insurance, and what’s the highest deductible you’d be comfortable with?
Sense says
I pay $0! I am a resident of New Zealand and it is so, so nice to have federal coverage! I do pay out of pocket for dentist checkups (~$100 NZD/year), eye exams/glasses/contacts (~$100/year), and I have a $17 co-payment for each doctor visit, but so far I haven’t had to spend much here in NZ at all. We also have federal accident coverage for anyone–tourist or citizen–that gets hurt accidentally in NZ (http://www.acc.co.nz/). It is sponsored through a salary tax levy. The government pays for everything from the ER ride to the cost of crutches or a cab to work each day after the accident until recovery.
My taxes here are about the same as they were in the US, believe it or not. Getting the US to do the same thing would be amazing. I don’t ever EVER want to go back to having work-tied health coverage! The only reason I buy a 1 month emergency health coverage policy each year is to cover my visits back home to the US, and that is about $50 USD. I really hope we get some universal health care policies pushed through very soon, because I’ve seen both sides of the coin.
Karellen says
$1,400 for stitches? WTF?
Karen (Scotland) says
Um, I’m actually just feeling extremely humble and blessed right now to live in the UK where healthcare is free.
Our NHS is oft-criticised but when I hear $1400 for stitches, I think back to my own drunken escapade as a student requiring stitches on my knee (yes, I’m ashamed) at a time when university itself was free, my son’s stitches under his chin, my daughter’s general surgery at a day old, the tongue-tie division op for my first son…
We pay National Insurance from our salary as well as regular income tax; healthcare and a basic pension are universal.
It’s only from reading US blogs that I realise how utterly right our government is to keep the NHS and how truly awful it must be for “poor” and even “normal” people in the US.
I do think our system needs tightened up, however – obesity is on the increase and other factors such as smoking are putting a HUGE burden on free healthcare. What to do though? Charge penalties? How to prove someone smokes? Charging drunk students for their stitches?
Oh, and, yes, I think it makes sense for you to increase your excess (deductible).
:-)
Karen (Scotland)
Jess says
I am SO GLAD I’m Scottish. I cannot imagine having to pay $500 every single month for healthcare, especially then having to pay the first $7000 myself – crazy! I don’t pay that much in taxes every month and my healthcare is pretty much free – the Scottish government has just abolished prescription charges so all I pay for is glasses (£35 every 2 years) and contacts (£10 a month), plus (subsidised) dental checkups and treatment. And if you’re on Income Support, under 16, 16-19 & in education, over 65, pregnant or had a baby in the last year etc you get theglasses & dental care free too. I love the NHS!
Sustainable PF says
I can appreciate the non-US residents comments. We’re in Canada and while on the surface it appears we pay “nothing” this certainly isn’t true for us or our European/NZ health care rich posters. We all pay, but the payments are absorbed into our taxes which at least for us in Canada are quite a bit higher than those the average U.S. citizen pays!
Now that being said, I much prefer to pay some more tax and know I don’t have to make a choice about the “bare minimum” (read: deductible) we’re willing to absorb. Nor do we have to worry about which finger we can afford to save if we lop a few off.
I find it interesting just how vehement Americans can be about universal health care out of fear of socialism. Canada, Scotland, NZ, Britain! These countries aren’t communist, or even close to it – but we do take care of each other out of a communal pot of money dedicated to the health of our citizens.
Stitches (suture and a needle) for $1400 says it all. I feel for ya Frugal Babe. I would hate to have to even consider some of these decisions.
Eileen says
Thanks for the informative post. We moved to my employer’s high deductible plan 2 years ago (they raised the employee contribution for the normal plan high enough that it made no sense to continue with that one). I think the key is clearly (as you wrote) to make sure you have enough in your HSA to cover that deductible (whatever it may be for any given person/plan). Knowing the HSA funds are always your own, there is no reason to gamble with the deductible “gap”. Moving to the high deductible, we cut our premium in half, plus my employer funds $1000 to the HSA each year. We contribute the rest into the HSA to cover the deductibles and still aren’t spending more than our prior plan’s premiums. So far so good!
We had 1 ER visit that cost us around $1200 and it was for a suspected appendicitis, which turned out to be nothing but a bad stomach virus, so that fee was for the ER visit and some basic tests. Our pediatrician sent us to the ER. Had my doubts that it was actually appendicitis (based on evaluation my own son’s behavior when getting asked about the pain) but obviously wouldn’t have 2nd guessed the Dr. Of course, we got checked into the ER, he threw up one more time and then felt better. :)
We’re also done with orthodontics (finally) and now moving on to 2 kids needing wisdom teeth out. Shouldn’t be a big hit for the deductible due to dental plan…but that remains to be seen in reality.
FrugalBabe says
It’s interesting that several of these comments are from people who live in countries with national health care systems. I absolutely feel that is a better way to go, and find it sad that the US continues to have access to health care that depends on how much money a person has. I don’t think we’ll get a universal health system anytime soon though, given how hard it was for just some basic health care reform to be passed. But maybe someday…
Just to clarify, the $1400 ER bill for our son’s stitches was for more than just a cut. His finger got caught in a door and the tip of it was nearly severed. They did an excellent job of reattaching it and getting him put back together. The $1400 also included an x-ray and a visit to a hand surgeon the next day.
Kaytee says
I would really really like to see an article about health insurance choices for the self-employed with a condition, such a Type 1 Diabetes. One of the items tying me to my job is that I have health insurance for myself and my husband. My husband is currently self employed as a carpenter. The out of pocket costs for the insulin pump, pump supplies, insulin and glucose monitoring are quite high. Plus specialist doctor visits (apparently only specialists can write prescriptions for insulin) and routine physicals. My husband is an incredibly healthy person who just happens to have this one little thing. He honestly feels like a csah cow to doctors because he has diabetes and is covered by insurance.
On the flip side, I was very happy to have health insurance two months ago when I had to have emergency surgery to remove an ectopic pregnancy and rupturing tube. The total came to about $20,000, of which we’ll have to pay about $2000. We have plenty of money in our emergency fund to cover the difference. It will take another beating soon when we have to pay the $4100 to cover the cost of a home birth in our area (pregnant again, this time in the right spot). Our insurer has a policy that it will not pay for homebirth or associated care because it deems it unmedically safe.
Meg says
Wow. I’m sorry to hear about your son’s visit! Poor little guy!
I have insurance through where I work. It costs me $60/month and we have pretty good insurance with $15 office visits, $100 ER visits and no deductibles to meet. If I were to join the “family plan” with my husband, our insurance would be over $350/month! Hubby has insurance through where he works and I have my own.
I am so happy I have insurance. In 2005, at the age of 24, I ended up having a stroke (due to birth control : you know, the statistics that 1 in 98 women can get a blood clot by using birth control? Yeah – I’m that 1). 4 days in the hospital and months of physical therapy to regain strength in my left arm.
October 2009 – I nearly lost my life to the H1N1 virus. I was the one going around saying there is no way I’d get the virus, after all, I never get sick! With a fever over 103, I went to the hospital. They sent me home with meds. A week later, I was hauled off in an ambulance and put into a medically induced coma for 7 days because I was not able to breathe on my own. On top of H1N1, I had viral pneumonia in both lungs and got a blood clot in my left lung while in the coma. 17 days in the hospital and a medical bill of over $250,000: I paid $100 for the copay and $50 for the ambulance ride.
Due to my past, I dont think I’d ever be able to get health insurance on my own. Sometimes, you cant control when or how you get sick, but I thank my lucky stars I was insured.
M- says
Frugal Babe-
Hey, on the HSA can that role over year to year? I know our FSA is a use or lose type of account. Did you set up your HSA through a bank or your business?
Thanks for all your information!
M-
Frugal Babe says
Kaytee and Meg, sorry about the medical scares you’ve both had – glad you had health insurance! Kaytee, In most states individual health insurance (non-group) is medically underwritten and Type 1 Diabetes (and Type 2, for that matter) is an automatic decline. There are only a few states (five, as far as I know) where individual policies are guaranteed issue, but that will be changing in 2014 when the health care reform law will make all individual policies in all states guaranteed issue. Between now and then, however, there are few options for people with diabetes in most states. The health care reform law created pre-existing condition health insurance plans (sometimes called high risk pools) for people who can’t get individual coverage, but you have to be uninsured for six months in order to qualify for coverage under those policies. A lot of states also have high risk pools that they administer on their own (not related to the new federally-funded programs), but those usually require that you not be eligible for any other coverage. Unfortunately, there just aren’t a lot of options for people with pre-existing conditions for the next couple years. Hopefully things will get easier in 2014 when coverage becomes guaranteed issue.
M – Yes, HSA money rolls over from one year to the next. And if you don’t use it for medical expenses, it doubles as a retirement account and works much the same as a traditional IRA. If you pull the money out for medical expenses, it’s always tax-free. If you opt to use it as a retirement account instead, you’ll pay income taxes on the money when you withdraw it, just as you would with a traditional IRA. We have our IRA with Saturna, and the money is invested in a mutual fund. It’s independent of our business. Here’s more info about HSAs: http://en.wikipedia.org/wiki/Health_savings_account
bogart says
Great post and interesting question. I pay $200/month through my employer for coverage for me and my DS and my DH has coverage (no out-of-pocket premium, though that’s changing soon) as a retiree. As DH & I have different plans, we have different deductibles; moreover, there’s a lot that’s excluded from the deductible(s) … last year I broke my arm badly, had surgery, and gleefully thought I was near my $2K deductible only to realize that copays ($45 per PT visit, for example, and those were weekly for 5 months — actually, still are …) don’t count toward it, drug costs don’t count toward it. Suffice it to say that ignoring the uncovered IVF cycle we spent our flex funds on last year, our out-of-pocket health care costs last year were $8K, though in fairness, about $3K of that was dental (at least 2 root canals — maybe it was 3; I forget for DH — and 2 crowns, though that’s the cost with insurance for all of us). Is your $5K really an out of pocket max for the whole family? That sounds entirely tolerable, especially with an HSA.
Frugal Babe says
Bogart – Yes, the $5k (well, $7k now that we made the switch to a higher deductible) is the max out of pocket for the whole family, but as with any policy, not everything is covered and there are limits on some services. Physical therapy, for example, is only covered for up to 20 visits per year. When my husband had knee surgeries in 2008, we made sure both knees were done in the same year, with enough time after the second surgery to fit in 10 PT visits. If he had gone for more than a total of 20 visits in the year, we’d have been paying for them ourselves.
Some things – like maternity care, for example – are not covered at all, so we paid our midwives ourselves with both pregnancies ($3000 each time, plus the cost of labs), and the money we spent didn’t count towards our deductible. In addition, dental care is not covered at all. We spent $4k in 2005 and another $17k (not a typo) in 2009 on dental expenses. My husband has a very expensive mouth following a mountain bike crash 15 years ago.
But for most medical care, the deductible is our max out of pocket.
bogart says
FB — Thanks for your reply. Yes, the excluded stuff can add up in my experience (but for “not” high deductible plans as well as for high ones…). Sorry to hear about your DH’s mouth — that sounds tough, and not just financially!
Emma S says
This just seems so unreal to me! Being Canadian means we don’t really have to think about this stuff, never mind saving thousands to have peace of mind over the health of your children! Being a parent is hard enough without the added burden of being able to afford basic healthcare services for your kiddies.
All we really have to worry about is Dental and Eye-care, which is mostly covered by my work’s benefits program.
Leah says
Interesting to hear that your health insurance does not include maternity. Mine doesn’t either. I pay $150 per month (in 3 month increments) for my single late 20s lady insurance. I have a $5,000 deductible. I do get $1,000 worth of office visits in a year (physicals, annual, etc). Supposedly, that is only supposed to be used for preventative care, but they’ve always paid up when I’ve had a sinus infection or something. And even when I don’t meet my deductible, they do negotiate one ER visit a year for me. That was great the year I went to the ER and had a bill for $4,900. It got negotiated down to $1,800, and they covered $600 of it in the $1k per year of office visits.
While I wish we had some sort of collective, national insurance (I really dislike employer-sponsored health insurance, for the most part), I think I have the best of what I can currently get in the US and am happy with my coverage.
Jaime B says
I’m in the US, with an employer-sponsored plan. I pay $27 each pay period (biweekly) for single person medical/dental/vision. Honestly, I don’t remember what my deductible is, but I want to say it is $1k and I pay a $30 copay for each doctor visit. My Rx copays are between $10 and $45. This year, we had a change in our Rx copays. It’s something about if we choose to use a brand name medication even though a generic is available that we have to pay the difference or something like that. It appeared to be worded as incomprehensibly as possible, lol.
Honestly, I have no idea what my policy covers and doesn’t cover beyond the usual yearly checkup/womanly visit and the random illness. I just haven’t had to use it for much of anything else. I once had my gallbladder removed and remember that I only ever received a bill from the anesthesiologist and I think that was about $40. I remember being surprised, but certainly didn’t rock the boat. I’ve been in the same job, with the same insurance company for 12 years so it’s not like we’ve changed and they lost the paperwork. I just chalked it up to luck.
Even though I’ve been lucky with my employer’s coverage, i would still like to see a national healthcare system. My friends who have family policies pay $200-400/mo for their coverage and it’s just crazy.
Amy B. says
Our family of four pays $30/month for a $5000 deductible/$10,000 max family (100% coverage after that). First $1,000 in medical expenses is reimbursable by husband’s employer. We just moved to that plan, which feels so risky!, after a hard look at our finances and coming to the same conclusions as Frugal Babe. We get the $1,000 credit, plus a guaranteed $2,000 or so in premium savings – and if you add in the $1,250 max out of pocket we’d pay anyway with the more expensive plan option, our individual risk is only $750. Family risk = $5,750. Husband works for the state of Alaska, which offers excellent, affordable health insurance, even if wages are lower than average.
We also recently raised our deductible on our car insurance, which lowered our premium a bit. When I pressed for other savings possibilities, I was told about Allstate’s “elite driver” discount (good credit/three years no tickets or accidents). That cut our premium by more than 60 percent. Yes, SIXTY.
Interesting post – thanks!
Lisa says
I’m canadian & every time I hear about the US medical system, I’m flabbergasted. It all just seems so *wrong* to deny care to so many people. Having a system that runs for profit is what makes it all cost so much. If you take the profit out of the equation & socialize medicine, it’s much more affordable to run. I think that’s the real reason that there won’t ever be a proper socialized system in the US: too many corporations are making way too much money off of it.
On another tack, I know that if you have a ‘preexisting condition’ like diabetes, you can’t really get health insurance. What about smoking? Does that make it harder/impossible to get health insurance? Or having more risky jobs? Would your premiums go up if you had a c-section, because of the likelihood of having another with a subsequent birth?
Frugal Babe says
Lisa,
If you work for a company that provides group health insurance, pre-existing conditions aren’t as big a deal. You might have a waiting period if you haven’t had continuous coverage before joining the group, but you won’t be denied or rated up based on medical history. The individual market (where we buy our health insurance, since we’re self employed) is very different. It will be changing in 2014 to become guaranteed issue, but for now, medical underwriting is standard. A person with diabetes won’t be eligible for individual coverage from any carrier that I’m aware of. A person who smokes will be charged extra premiums (and if the smoking is combined with other factors, such as high cholesterol or high blood pressure, some carriers will decline the application). A person who has had a c-section will find that some carriers will accept her, some will increase the premiums, and some will exclude future pregnancies/c-sections. Underwriting varies quite a bit from one carrier to another, and from one state to another.
Ame says
To the posters who live in countries with universal/free health care. What is thr wait time to see a doctor or to have surgery. I recall an Oprah episode where Canadians and some Europeans said the wait could be months and months.
Lisa says
Re: wait times.
Partly, it depends on how essential the surgery is. Things like c-sections (& anything else that’s an emergency) obviously happen exactly when they need to. If it’s something like hip replacement & it’s not life-threatening, then the wait can be months, yes. But not all non-essential things involve a long wait. A friend of mine required knee surgery & was told the wait might be weeks or months, but then she was able to get in within that week.
Linda says
I’ve had the greatest insurance in the world (through a large corporate office). I’ve had terrible insurance (through my husband’s small business) and I’ve had none (when we had to go “bare” a year to qualify for cheaper insurance (it still costs my husband and I $300.00 a month for just us). Unfortunately, my husband had leukemia and a bone marrow transplant at 33 years of age. The good news is that he’s 21 years in remission. The bad news is that old pre-existing condition clause unless it’s through your employer.
When the premiums for family coverage (we have three children) went to $800.00 (!!!!) per month we had to drop it and go bare to apply for something else. Talk about terrifying. Our out of pocket medical bills over the years (he’s had two hip replacements due to prednisone due to the transplant) are so much I’ve never actually totaled them up.
The next time people raze Obama for trying to help middle class people like us – remember George Bush didn’t do a THING for healthcare. Only the very rich and the very poor in this country get any help with their healthcare. As these other people say (in other countries) it’s a crime and disgrace with all the MONEY at their disposal that this hasn’t happened long ago.