If you get health insurance through your job, beware: you might be picking up more of the cost of your medical care than you realize. With increasing frequency, employers are directing their workers to the kind of high deductible, high out-of-pocket insurance plans that leave workers financially responsible for a surprising portion of their health care expenses.
Not long ago, having insurance coverage meant your costs were largely covered. Americans could count on their employers to offer health insurance plans that covered the vast majority of their health care expenses. What’s more, employers even chipped in generously to cover a good chunk of people’s monthly premiums. As a result, Americans with good jobs could live their lives unafraid that they would be financially devastated by an unexpected acute illness.
But this generosity came at an increasingly unaffordable cost for American companies, with the price of health insurance threatening their bottom line. In response, companies have looked for ways to get their workers to pick up more of the tab.
Enter high out-of-pocket health plans.
On the surface, these plans look like bargains, because they cost less each month than other plans. When signing up for insurance, many people are attracted to these plans, knowing they will have less of their take-home pay diverted to an insurance company. But then they discover that even a minor illness can turn that bargain to a burden.
Suppose you have a simple case of walking pneumonia. You go to urgent care, where you get a chest X-ray, some blood tests, a course of antibiotics, and a follow-up visit with your primary care doctor. You will potentially be on the hook for thousands of dollars of medical bills. And if you are like many Americans, you won’t know the price of this care before receiving a bill in the mail; you might not even know that, because you haven’t met your deductible yet your insurance won’t cover any of these costs. The majority of Americans don’t even know what a health insurance deductible is, many believing (incorrectly) that all else equal, high deductibles must be better than low deductibles because the insurance company deducts more from the price.
Less than ten years ago, only 1 in 8 Americans working for large companies enrolled in high-deductible insurance plans. According to a Kaiser Family Foundation study, that number is now closer to 1 in 2. And among Americans working for small firms, with less than 200 workers, 2 out of 3 have high-deductible plans.
Two-out-of-three!
These plans are not always great bargains for workers. On average, the annual premiums are about $1,000 cheaper than other plans, but workers only pick up $300 of those savings, with the employer saving $700 of its contribution towards the premiums. It’s hard to receive any kind of medical care without spending $300. The end result is that employers save money, but most of their employees don’t.
If you are feeling squeezed by health care costs, pay close attention when you sign up for an insurance plan. What looks like a bargain probably isn’t.
Peter Ubel is a physician and behavioral scientist who blogs at his self-titled site, Peter Ubel and can be reached on Twitter @PeterUbel. He is the author of Critical Decisions: How You and Your Doctor Can Make the Right Medical Choices Together. This article originally appeared in Forbes.
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