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  • Writer's pictureDr Desai

Devastating Deductibles

Updated: 3 days ago

Not so long ago health insurance would cover all your health care costs. Even the introduction of co-pays was not a major barrier. These days people are often shocked by the bills they receive after a doctor or hospital visit. Deductibles mean that many people have to pay the full cost (or more - more on that later) of their health care. It has also become more difficult to find out the exact cost of care ahead of time, leading to large, unexpected bills.

So what can you do?

1. Understand your options

The new high-deductible health plans are really designed as car insurance. They are there to save you from a catastrophic expense but they are not useful for every day health care. Does your employer offer alternative plans? Would you get a better deal through your spouse? Would it help to join a union? Some people eliminate insurance altogether - this is not recommended as major, unexpected illness can run up very high costs.

2. Do the math

No-one can predict the future but based on prior years are you likely to meet your deductible? If at some point in the year your insurance actually starts paying for care then your best bet may be to put aside the amount of your deductible or pay for a plan with a lower deductible. If, however, your insurance never pays out then you may be better off going for a cheaper plan with a higher deductible since you will only use it in case of an emergency. Then you can use the savings to actually pay for the health care you need.

Probably the only benefit of a high-deductible plan is it allows you to set up a health savings account (HSA). This is an account where you can put pre-tax money for use towards health care expenses. Putting money into an HSA should help to reduce your tax bill. Remember that HSA funds can be used for any (qualified) health care expense, not just areas covered by your insurance. Also keep in mind that HSA funds don’t expire (unlike FSA’s).

4. Bypass your insurance

It would seem obvious that if you use your insurance for all health care you will pay the lowest possible price, correct? It comes as a shock to many people that the actual price for most health care is lower than the numbers they are getting on their bills. Why does your insurance charge you more than the cash price? It’s complicated - here’s an article if you would like to read more. Suffice to say that if you are not going to meet your deductible it will pay to shop around for cash prices and not use your insurance at all. You can still use HSA funds even if you are not using your insurance network. Consider using coupons for medications. Just remember that expenses that don’t go through your insurance will not reduce your overall deductible.

5. Budget and save

It can seem very difficult with the rising cost of living but try to put aside some money for an emergency fund. Put this money in a money market account where you have easy access but it will gain in value over time. If you do find yourself with a large medical bill, ask if it can be reduced. Arrange to pay it off in installments. If you’re having a hard time, contact Medicaid to see if you’re eligible for any one-time or ongoing assistance. If the last time you asked was a year ago, ask again.

6. Dispute your bill

There are new companies on the market that will dispute your hospital bill for you. Typically they will keep 20% of whatever they save you. They are only effective if you haven't paid the bill yet and you haven't been sent to collections. Given the large numbers involved, it can be worth giving up the percentage for what they can save you.

There’s more...

Switching subjects - look out for the next article.

Please remember that reading an article does not constitute a doctor-patient relationship or any form of individual medical advice. Everyone deserves to have a doctor - so find one that you can talk to or make an appointment!


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