Make the most of a high-deductible health plan

You're listening to LifeKit from NPR. Hey, it's Mariel. Today we're talking about health insurance, specifically high deductible health plans. High deductible health plans are common in the US. A lot of people choose them because they have much cheaper premiums and premiums are what you pay every month just to have the insurance, even if you don't use it. If you get your insurance through work, these will come out of your paycheck. The thing is, high deductible plans also have high deductibles. Your deductible is the amount that you have to pay for covered services before your insurance start sharing costs. This is Jackie Fortier. She's been reporting on high deductible health plans for an NPR and KFF health news series called Health Care Helpline. Now sharing costs means that after you've paid a certain amount out of pocket, your deductible, your insurance will pay a portion of each medical bill and you'll pay the rest. Could be an 80/20 split, a 70/30 split. It depends on your plan. A lot of folks sign up for high deductible plans because of the cheap premiums, but then they get surprised later. I talked to Madison Burgess. She's an elementary school teacher in San Diego. And she was shopping around for a good deal for her husband. And when I initially got the plan, I just looked for the cheapest thing. And I didn't know what deductible was. I just went with what was cheap. And now I have regret. So her husband has to meet an almost $6,000 deductible before insurance will pay. If you signed up for a high deductible health plan and now you're wondering, how do I use this thing? We are here to help. On this episode of LifeKit, a playbook for using your high deductible health insurance plan. One tip as a preview. If you know you have to get an expensive procedure or surgery or test done, try to time it out so you meet your deductible as early in the year as possible. Hey Jackie. Hey, Maryl. You mentioned that someone you interviewed has to meet a $6,000 deductible before insurance will start paying for their care. Is that common? Yeah, it's kind of middle of the road. The IRS actually defines high deductible health plans. The minimum deductible for this year is $1,700 for an individual. But some individual like catastrophic deductibles can exceed $10,000 for a single person a year. That would be a pretty big shock if you haven't had a high deductible plan before. Yeah. And I think high deductible plans can be like confusing because the timing of the costs is so different. So under a traditional plan, you know, you might pay like $20, co-pay to see your doctor. But under a high deductible plan, you pay the full negotiated price of the visit until you hit your deductible. So you might pay, you know, $100 for the same doctor visit. Take away one. If you have a high deductible plan, find out what your deductible is. If you take out your insurance card, it'll probably be on there. Or you can also look in your portal online or in your plan documents. And then if you go to the doctor, remember you might have a lot of bills to pay upfront. These can range, you know, maybe you're used to paying a $30,000, co-pay when you go to see the doctor. But now the office is asking you to pay $130 for the same visit. Or you get a blood test done and you have to pay a couple hundred dollars for that. So one of the challenges right is that when you have a high deductible plan, you end up with a lot of upfront costs. How does that play out for a lot of folks? I think it really changes how some people choose to use their healthcare. I talked with Thomas Lehman. He's a dog walker and pet sitter in the Atlanta suburbs. And he's had a high deductible plan for a few years now. You know, he spends thousands of dollars a year just on premiums. That doesn't leave a lot left over. So he and his wife only see a doctor when it really feels unavoidable. So we're kind of stuck in this situation where I mean, we only use it for maybe emergencies or semi emergencies. And he told me that he would go to the doctor more if he had more traditional insurance. But with a high deductible plan, he's just not comfortable doing that. So he only goes when he feels like he really has to. Take away too, though, is there are ways to manage these upfront costs? At LifeKit, we've reported on how to apply for financial assistance, also known as charity care from a hospital. Even if you haven't met your deductible yet, hospitals might lower or eliminate your bill depending on your income. Another option is to get on an interest free payment plan with your hospital or doctor's office. And here's how that works. Imagine it's January. You have a $6,000 deductible and you have to go to the hospital for something. Then you get a bill and it's $2,000. You're expected to pay that bill directly to the hospital because you haven't hit your deductible yet. But that doesn't mean you have to pay it off all at once. Ask the medical billing office to put you on an interest free payment plan. That way you can pay an installments every month without accruing interest. Now, it is possible that when you ask, they'll say no, but these types of payment plans are very common. And to be clear, we're not talking about signing up for a credit card or a loan. This is just an installment plan that you set up with the billing office. And before you start paying, you want to confirm and writing that you won't be charged any interest. Another strategy, if you have a high deductible health plan, is to see if you can benefit from timing your health care visits so that if you're going to hit your deductible, you do it early in the year. There is an advantage to meeting your deductible early in the year if you can. I talked with Caitlin Donovan with the Patient Advocate Foundation. And she said it does pay off to sort of strategically schedule those big ticket medical treatments. You might want to schedule those treatments up front, a surgery up front, so that way you're paying for your coverage. And then the rest of it kicks in for the rest of the year and you get to enjoy that kind of safety cushion. So most deductibles reset on January 1st. And again, if you can afford it, meeting your deductible sooner can make the rest of the year significantly cheaper, especially if you have a chronic condition. This is our third takeaway. Be strategic about when you schedule expensive procedures and visits whenever possible. Of course, if you've already met your deductible in a given year, that's also a good time to get your expensive medical care done. We'll have more life kit after the break. Now on to takeaway 4, certain kinds of visits and services are free, even if you have a high deductible plan and haven't met your deductible yet. This one surprises a lot of people. As with most insurance in the US, even if you have a high deductible plan, many preventive services must be covered by law with no out of pocket costs from you. So this includes things like annual checkups, many vaccines and immunizations and screenings for a lot of cancers. There is a whole list and these services are free when you go to an in-network provider. So you should really take advantage of those. If you're on a high deductible health plan, how can you budget for the upfront costs that we've been talking about? It's really important to treat your deductible like a bill that you might have to pay. It doesn't mean that you're going to hit it every year, but if you have like a $4,000 deductible, it can help to slowly set aside money during the year so that a surprise medical issue doesn't become a good deal. So if you have a high deductible plan, you very likely can open an HSA. New this year, folks with bronze or catastrophic ACA plans can open an HSA. There are a few people who can't because of their individual circumstances. So if you have a high deductible plan, you can open an HSA. If you have a high deductible plan, you very likely can open an HSA. So if you have other health insurance like Medicare or you have coverage on your spouse's policy, you cannot open an HSA or if you're claimed as a dependent. A lot of people who have a high deductible plan don't actually open an HSA, but they are pretty neat. You can think of them like a medical piggy bank. It also has a triple tax advantage. You put money in before taxes, it grows tax-free, and then you can spend that money tax-free on qualified medical expenses. Take away five. Don't sleep on your HSA. An HSA is a savings account for medical expenses. The money you put into it will not be taxed. It either comes straight out of your paycheck before taxes or you can put it into your account and get a tax deduction in April. Your HSA account belongs to you. If you open one through an employer and you leave your job, the money still yours and the money rolls over every year. It is important, I think, to remember if you don't have a lot of extra cash to put into an HSA, you are not alone. A lot of people paying their health insurance premiums and medical costs. They can only contribute a little bit. But the amount that you put into the account is totally up to you. You can start really small if you want to, just a few dollars a month, if you want to slowly build it up. There is an annual limit set by the IRS. It is based on the number of people on the policy. For 2026, it is 4400 for an individual and a little over 8700 for families. Anything under that ceiling that you want to put into an HSA is completely up to you. What sorts of things can you use the money in your HSA on? You can pay for quite a bit. You can pay for those doctor visits. talked about earlier, prescriptions, even products like over-the-counter medicines, tampons, sunscreens. You get issued a debit card from the bank where you open the account, and that's how you buy anything. And that money is yours. There's no deadline to use it. It typically cannot be used for monthly premiums, but again, you do get to keep that money for any of these qualified medical expenses for you, your spouse, or your dependents anytime in the future. If you get insurance through your job, your employer may match the amount that you put into the HSA up to a certain point, or they could just add funds. You could ask your HR department about the details on that. If you buy your insurance through the exchange, though, you do have to fund the HSA yourself. Another thing that's nice about HSA is that you can invest the money in your account in stock market funds, usually once you hit a certain threshold. And you'll never be taxed on that money, not even the growth. As long as you eventually use it for qualified medical expenses when you do withdraw it. Investing your HSA funds may not be an option for you right now, but if you can afford to let the money sit in there and grow, this can be a great long-term investment. Keep in mind that HSAs are different from FSAs or flexible spending accounts. It's funny, they get mixed up a lot because they're both these tax-advanaged healthcare accounts that you fund, but they do work differently. So a flexible spending account is more like a short-term budgeting tool for that year. This is an employer-sponsored benefit. So it's owned by your employer. You usually have to use it or lose the money by the end of the year. It does not require a specific type of health plan. It is also tax-free for qualified medical expenses, but only when you're employed at that job. Okay. Anything else that folks with high deductible health plans should know? Another thing that people might be considering is paying cash. When it's time to pay for your care, some people think it's maybe more affordable to skip using insurance. Some hospitals or clinics will offer cheaper prices if you pay cash because they want to get paid. You do have the right to an itemized estimate and explanation of how much a health service would cost if you paid out of pocket. So if you have time before you go and get that service, you could go and ask them how much it would be. Then you can compare that price with what your insurance company tells you it would cost if you used your insurance. Paying cash may save you money, but remember the amount you pay generally won't count toward your deductible or your out of pocket maximum because you're not going through your insurance. If you're able to, usually before a surgery, for example, that you might have planned, you might be able to do the math on how much it would cost if you paid cash versus how much it would cost if you went through your insurance. Jackie, thank you so much for this. Yeah, thank you. Okay, time for a recap. Take away one. If you have a high deductible plan, remember you might have a lot of bills to pay up front. Take away two. There are ways to manage these costs. Even if you haven't met your deductible yet, hospitals can lower or eliminate your bill based on your income. Another option is to get on an interest-free payment plan with your hospital or doctor's office. Not a credit card or a loan, just an installment plan with zero interest. Take away three. If you think you're going to meet your deductible, you want to schedule expensive medical procedures and visits earlier in the year so that you can squeeze the most out of your plan. Of course, this isn't always possible. And if you've already met your deductible in a given year, that's also a good time to go to the doctor. Take away four. Certain kinds of visits and services are free, even if you have a high deductible plan and you haven't met your deductible yet. And take away five. It can save you a lot of money in taxes and help you save up for medical bills. That's our show. If you have a question or a story about navigating the healthcare system, it could be part of an upcoming healthcare helpline installment. You can share your story by following the link in the show notes of this episode. This episode of LifeKit was produced by Margaret Sereno. Our digital editor is Malca Garib and our visuals editor is CJ Riccalon. Megan Kane is our senior supervising editor and Beth Donovan is our executive producer. Our production team also includes Andy Tagle, Clamery Schneider, Sylvie Douglas and Mika Ellison. Engineering support comes from Code Taka Sugi Chernovan. I'm Mary El Segara. Thanks for listening.