The Deductible Problem
Editor’s Note: People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one are struggling to afford or access insulin, you can build custom plans based on your personal circumstances through our tool, GetInsulin.org.
Updated November 2021 for 2022 Open Enrollment.
Deductibles and premiums
In a health insurance plan, the deductible is the amount paid out of pocket by the policyholder before insurance coverage kicks in. The premium is the monthly cost paid to the health insurance provider, and does not count towards your deductible. Plans with higher deductibles typically have lower premiums, and vice versa. Over the past two decades, deductibles have been steadily rising and a greater percentage of Americans have been enrolling in high deductible health plans.
What counts towards your deductible?
The services covered by your deductible vary by health plan. Most health insurance plans cover preventive services at no cost to the policyholder. Preventative services include annual checkups, screenings, immunizations, counseling, and more. For some health insurance plans, costs associated with everything other than preventative services goes towards your deductible. Other plans exempt some services from the deductible — usually services that require copayments such as doctor visits. Some deductibles cover the cost of prescription medicine, and some plans have a separate deductible just for prescriptions.
What is a high deductible health plan?
For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. High deductible health plans (HDHPs) typically have lower premiums, so appear to be less expensive out-of-pocket. However, for anyone with any chronic health needs — not only diabetes but hypertension, asthma, etc. — or for anyone who has an unexpected health event, HDHPs can get expensive quickly. To plan costs with an HDHP, factor in the out-of-pocket expense limit.
In 2022, out-of-pocket expenses are limited to a maximum of $7,050 for an individual and $14,100 for a family with an HDHP. High deductible plans are a form of catastrophic coverage, intended to cover only catastrophic illnesses, rather than constant visits to the doctor or prescription refills. As a way to offset the cost of an HDHP, a consumer may contribute to a Health Savings Account (HSA) which allows them to set aside pre-tax income that can be spent on health care.
Worth the risk?
The percentage of workers enrolled in HDHPs has been steadily rising since 2004, when only four percent of workers were enrolled in these types of plans. In 2016, the number had risen to 29 percent. In 2020, almost half of the US workforce was enrolled in an HDHP. In some cases, this is because an HDHP may be the best choice for an individual or family but in others, it is because HDHPs have become a popular option among employers and insurance companies, as they lower employer healthcare spending and company costs.
Current studies show that anywhere from A recent study from USC found that individuals enrolled in HDHPs were at a significantly increased risk of financial trouble, especially those who are low-income or living with a chronic illness1. In 2015, one in five workers had a deductible of $2,000 or more.
Advocates for HDHPs say that when consumers have to front the costs themselves, they are more likely to take care of themselves and avoid unnecessary medical procedures and trips to the doctor. There are several problems with the assumption that consumers with high deductibles will be more discriminant in their healthcare decisions.
When the upfront costs are high, people may avoid seeking treatment for healthcare issues until they become emergencies. 43 percent of insured patients said they delayed or skipped physician-recommended tests or treatment because of high associated costs. Doctors have even reported cancer patients giving up life-saving treatment at the end of a calendar year because they could not afford to pay their deductible which would reset in January.
High deductibles and diabetes
For people living with Type 1 diabetes, high medical costs are a fact of life. With insurance, people with T1D will spend on average over $10,000 a year managing their condition2. And without insurance, the costs for someone with Type 1 diabetes can reach as high as $45,000 per year3. If you have a high deductible and T1D, maxing out your deductible is inevitable. If you have a chronic condition, choosing a plan with a low deductible is almost always the best way to go. It is important to check with your insurance company before signing up to see if your current medications and devices are covered. If you have a certain pump, CGM, or brand of insulin that you are using and do not want to switch, you may need to stay with your current insurance company. For more information on health insurance plans, check out Beyond Type 1’s guide.
For resources on navigating insurance with Type 1 diabetes, click HERE.