The concept was designed to benefit working individuals and families. Unfortunately for most it hasn’t worked as intended. For many Americans between 40 and 65, the Post-Covid economy is likely to make things even worse.
High deductible health plans (HDHPs) were introduced in 2004. The idea was a plan that reduced the cost for health insurance coverage. HDHPs would especially benefit the millions of workers offered health plan coverage at work. The plans would especially benefit younger individuals who generally have few if any health-related costs.
To sweeten the deal, the government approved tax-advantaged Health Savings Accounts (HSAs). Individuals would contribute dollars into their individual HSA on a pre-tax www cbdpost us. When withdrawn for medical expenses the money would not be taxed.
So what’s the problem? And why will a post-Covid economy likely make the situation worse for many working age Americans?
Since their introduction, high deductible health plans have increased dramatically in acceptance. Among adults between ages 16 and 64 who have employment-based health coverage the percentage enrolled in a traditional health plan decreased from 85% to 57% according to the U.S. Department of Health and Human Services. Meanwhile some 19% have an HDHP coupled with an HSA. One in four (24.5%) have a High Deductible Plan without the tax-advantaged savings benefit of an HSA.
Without question, those with no or few medical issues during each year benefit from the money saved selecting a high deductible plan.
The same is not true for many of those who have more serious medical needs. Many of us are one diagnosis away from a most significant financial crisis. Consider that one American adult is diagnosed with cancer every 21 seconds and another has a heart attack every 40 seconds. Add to that accidents, pregnancies, diabetes and now, of course, the Covid virus.
Individuals are likely to be impacted in three ways when they experience any serious health issue. First, they are likely to reach their health plan deductible. Second, they will likely face meeting out-of-pocket maximums. Finally, they are likely to find not all health related costs (including the medications prescribed) are going to be covered their insurance plan.