High deductible plans = fewer, not cheaper medical expenditures

by Mémé

A widely reported study last fall, summarized below in a Vox article, found that high deductible plans do not lead to cost shopping, but to lower utilization of medical services.

This study is forcing economists to rethink high-deductible health insurance

The researchers had a particularly fortunate natural testing pool. A corporation changed from a Cadillac plan to a high deductible plan, and deposited 3750, the amount of the deductible, into a Health Savings account for each employee. Economically, the fact that a formerly fully covered service would have a visible cost should have had no effect on behavior. (The article does not state whether the company provided a medical credit card that would draw from the HSA account – I suspect that cash outlay was required followed by reimbursement.) However, people reduced costs by simply not going to the doctor at all, even those with chronic conditions who would easily blow through the deductible quickly and re-enter the fully covered stage early in the year.

I personally noted a change in my behavior – when I have to pony up the “full” health plan reduced cost (I never reach the deductible) for something, I don’t bother to consult the doctor and just use Dr Google and non-prescription remedies. I can certainly afford it – I have a self-funded HSA with a Visa attached. But it just seems wasteful to spend 150 just to be told to put liniment on an aching joint. I used to go to the company nurse for minor complaints when it was free or to the HMO when it was just a small co pay. Last fall I could not shake a cold/bronchitis so I spent the money and went twice. (She finally suggested a Neti Pot. One look at it and the how to video and I was “healed.”) In Sept I start with Medicare advantage and I assume my behavior will change back to my old habits.

For those of you with high deductible plans, do you comparison shop or forgo non-emergency visits? For those who don’t have high deductible plans, is that a conscious choice because of actual usage, or perhaps because of the psychological issue described above?

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152 thoughts on “High deductible plans = fewer, not cheaper medical expenditures

  1. We have an HMO but are thinking about switching since insurance is through my work. I don’t go to the doctor very much, usually only for preventative care, but I really can’t imagine price comparing being something the majority of people would do. I go to my doctor because I trust and like him and if there is a referral, I go with what he suggests. I think the behavior described in the article goes along with people just hate losing found money and so they will alter their behavior to avoid it.

    My husband will go to the dr. when he gets sick but usually it’s just a virus so not a lot they can do is my thinking. I’m more likely to just wait it out when I get a sore throat or something like that.
    I’m more of the googler of remedies that Meme describes which almost always does the trick. If I think my kids have ear infections I usually don’t take them to the dr. either because I do not want them on antibiotics for something that will likely clear up on their own. I love our ped, he’s very old school, but I think he prescribes antibiotics too quickly in older children.

  2. We have a high-deductible plan, and I don’t comparison shop. I find medical pricing so opaque that I probably would spend more money in terms of opportunity cost of time than saving actual dollars. And then the price they quote can vary depending on what coverage you have etc.

    I had a year where I had to figure out my out-of-pocket costs on a regular plan vs. a high-deductible plan as I was getting reimbursed for the differences. The high-deductible plan was much cheaper – roughly $3,500. I was paying $200/paycheck for premiums on my regular plan. My DH’s high-deductible plan is about $35/paycheck. Once I did the analysis I feel better about paying for what I use vs. losing money on premiums regardless if I went or not.

    I love our current insurance due to the simplicity. It is $3,000 max per person and $6,000 for the family. Then everything after that is covered by insurance. After several years of using up all of our HSA, we now have about $7,000 in the HSA. If we need to go to the doctor, I know we have the money to pay for it. I don’t even think about cost any more. I had a moment of realization that I’m pretty rich compared to most of the world when I don’t even need to pay attention to health care costs. I had to look up something in my HSA account and discovered we had spent $900 on a prescription, and I hadn’t even noticed.

    Our HSA automatically pays the bills from the providers, so I don’t see payments. I probably should start switching that to where I send the check in and not use my HSA. That way I’d have more saved up for retirement savings in my HSA. Meme made a comment about that awhile ago. I need to look into that.

  3. We’ve been on high deductible plans for about 7 or 8 years now and it hasn’t changed how we seek medical care. I just assume we are going to reach the deductible (usually we hit it by March) and budget accordingly. I’m pretty sure we’ve already hit it this year thanks to DW’s two ER visits, and if that hasn’t quite done it, we’ll do it next week when she has an endoscopy.

    There is no need for comparison shopping because even when we are paying full price for a dr visit, it’s the contracted amount with the insurer. And you can’t comparison shop for the emergent stuff because even if a hospital would be able to provide transparent pricing, which they can’t/won’t, you don’t know what services you are going to end up needing when you walk into the ER.

  4. So I guess you could say we went from the ultimate single-payer system straight to an HSA. Well, on second thought, when I was still on active duty, DW was not thrilled with the OB care that she’d received through Pregnancy #1, and switched to Tricare Standard for #2 (it’s military double-speak: Standard is actually the upgraded option where you select approved civilian providers and pay a small co-pay; Prime is the standard where you pay nothing and will be seen either at a military facility or sent out to a civilian, depending on location and availability).

    We don’t deal with chronic conditions, just the usual suspicions of ear infection or strep throat? needs abx, or will clear on its own? bacterial, or viral? and cost might be a small consideration when I weigh whether to take a kid to the clinic or not. On the other hand, the fact that the money is separate from our regular credit card and checking account, and it’s well stocked (so I won’t “miss it” or “feel it”), and that it’s pre-tax money, all make me a little more willing to spend it than if it were going to show up on the credit card statement.

    As for my single-payer experience, while personal cost was not a consideration for seeking care, things like wait times and hassle were more significant variables with the same effect.

  5. “There is no need for comparison shopping because even when we are paying full price for a dr visit, it’s the contracted amount with the insurer.”

    yeah, for the standard stuff, I described, it seems like it’s about $120 whether you go to the pediatric practice, Patient First, or our regional walk-in urgent care.

    Yesterday #2 was diagnosed with pink eye, and the Rx for eye drops was $130. DW asked, but Walgreens said there is no generic. Does that seem right, Denver?

  6. I was having an “elective” procedure a few years ago and was trying to figure out how much I would pay under my insurance, so I could put the money away in our health flexible spending account. I echo the frustration of figuring it out. The insurance company at the time was marketing that we all needed to take responsiblity for the costs we incurred.

    My experience went like this:
    1. Doctor tells me the name of the procedure.
    2. Insurance says we need the procedure code.
    3. Doctor’s office tells me the procedure code.
    4. Insurance – the cost varies.
    5. Me – ballpark?
    6. Insurance – it varies.
    7. Me – what is the contract rate.
    8. Insurance – it varies.
    9. Me – how to I get an estimate?
    10. Insurance – you don’t.
    11. Me – goes back to marketing material and gets the name
    12. Me – calls name – so your article says to do “this”. How do you do that?
    13. Name – you call the 1-800 number.
    14. Me – I did, they only say it varies. Your article says to get the contract rate, they won’t give it.
    15. Name – Really, oh, let me find out.
    16. Me — waiting…crickets.
    17. Me – Calls Name again.
    18. Name – Its not our policy to give out that information.
    19. Me – Then why the *(&#*$_ did you say in your article to get the contract rate.
    20. Name – Oh, you have to call the provider to find out what they charge.
    21. Me – Calls provider – who gives their charge based on you having NO insurance, and won’t tell you what your insurance will cover unless they process the claim.
    22. Me – Calls name again, explains what provider says.
    23. Name – Can’t help you or tell you anything more.
    24. Me – Gives up and realizes the last 23 steps were a complete waste of time and only elevated my blood pressure.

    In another experience, found out that a group, the only one that does *this* for children, does it only in a hospital setting so you have to pay the $100 facility co-pay. In other cities, they do it in the office, but driving 4 hours with a child for a minor procedure seems stupid too. It was/is elective, so just waiting until she turned 16 to be treated as an adult.

  7. I think a lot of these ideas (moving from pensions to 401ks, privatizing social security, voucherizing medicare, etc.) all have the same flaw. They are thought up by wonks who love this kind of thing so much that thinking these things up is their job. But, in the real word, people just don’t have the skills and the unlimited amount of bandwidth to deal with all of it.

  8. Milo, it depends on what drops they are. There’s a bunch of different ones you can give for pink eye, your Dr. obviously picked one that doesn’t have a generic. Some providers pay attention to that when prescribing, and some don’t. I have to admit I usually don’t because most of my patients are medicare or medicaid and their scripts are filled through facilities, so if there’s an issue it gets kicked back pretty quick. The pharmacist should have at least mentioned the option of your wife called the Dr back to see if she could get something else that would be cheaper. There are plenty of generic drops that work fine for pink eye.

  9. I have thought about this problem extensively over the past decade, don’t have time to write all my thoughts, and realize my situation (complex pregnancy issues, two parents with terminal cancer) is unique. Other than well child visits/vaccinations, my kids seldom go to the doctor. We’ve had antibiotics a couple times across 24 child-years.

    My problems have involved 1) What is a covered service? 2) Is it covered under preventive care (before the deductible) or after? I can’t shop for care based on price because no one knows the answers and if I get an answer, it’s likely to be wrong. I have spent way too much of my life haggling with hospitals and insurance over incorrect bills, including a year of periodic phone calls as the hospital and insurance company continued to incorrectly rebill and try to send my account to collections based on disagreement over the level of NICU care one of my twins received.

    In my opinion, one of the worst abuses of the working poor is sending medical bills to collections, often incorrectly, and the lack of recourse by the consumer for such an error. You’ve probably all seen the statistics on how medical bills contribute to personal bankruptcy, but I believe that bills sent to collections incorrectly is an even larger problem.

    For example, a fetal genetic test is supposed to be covered for pregnant women my age but because of how Perkin-Elmer billed the test, United Healthcare rejected the claim. Perkin-Elmer (the provider) ignored the rejection for months, then sent me (the consumer) a bill in violation of its contract with United Healthcare asking me to pay $800, reduced from the $1500 list price. I responded to P-E that sending me the bill violated the terms of its contract with United Healthcare (which claimed the test was “covered” by its payment for a battery of tests) and P-E kept sending me the bill, along with collection threats. After numerous phone calls to P-E and United Healthcare, P-E eventually submitted the claim with the right billing code, United Healthcare paid its negotiated ~$500 rate (not $1500 or $800) and I paid my 20% of that $500. Before the Affordable Care Act, my insurance company would have paid 100% but because the test is not classified as prenatal preventive care, United Healthcare no longer covers it at 100%.

    And we wonder why normal people have trouble dealing with that system.

  10. To continue on from Milo’s Guardian article yesterday about Democrats being the party of professionals – I think much of the appeal of Trump and Sanders is the idea that people are tired of being told it’s up to them to deal with everything. Your factory job got sent to Mexico? Too bad. You panic sold your 401k and lost half your money? Too bad. You don’t have $6000 in a savings account to pay your deductible? Too bad. If you were smarter and less foolish you won’t be in this predicament so suck it.

  11. To Milo and DD’s conversation – It has become common for us to ask – is this prescription available in generic and/or when you send the prescription to the pharmacy (all electronic) are you allowing generic substitution? If no to either one, then is there a reason that we need THIS particular drug? Some times you get a negative reaction, but most doctors/PA’s etc realize the cost is an issue, especially if it is for a chronic condition.

  12. “The pharmacist should have at least mentioned the option of your wife called the Dr back to see if she could get something else that would be cheaper.”

    Yes, I was going to suggest that, but with the hassle of an emergent school pickup, and other issues, and the state that this had put her on, I thought better of doing so. :)

    But next time we will be sure to ask for a generic prescription, if at all possible.

  13. My experience with our HSA started when I ran the numbers:
    PPO Plan: $375/month = $4200/yr in premiums that are just like all other insurances…I’m out of pocket that amount no matter whether I use them or not
    HSA Plan: $27 (yes $27, not a typo…now it’s $29)/month = $324/yr. but I have to pay out of pocket the negotiated rates up to $3000, then I’m covered at 80/20 until I reach the max at which point I’m 100% covered in-network

    I concluded:
    if I roll my premium savings $350/month into my HSA I will cover my deductible (+ at least part of dental / eye / Rx which don’t play in satisfying the deductible). And if I don’t use the funds in the HSA, I can roll them to the next year ad infinitum. So that’s what I did. (Now I’m at the legal max for my contributions so I maximize the tax benefits).

    Result…we do not comparison shop. Fortunately the major teaching medical center here is in-network so there are plenty of all the specialists if it comes to that. We just go to the doc, pay the deductible with the HSA-issued Visa card and move on. The only time we have reached the deductible was when DS3 broke his leg in 2013.

    The “problem” with HSAs from a lot of users’ perspective is too many people do not (have the ability to or choose not to) fund their HSAs as I have done. They just pocket the premium savings (or spend it on other actual necessities like food, rent, gas, car payment) and then become price sensitive, so a $100 or $120 office visit becomes a no-go even when necessary. This is the biggest issue with ACA plans…they have low premiums, but require people of generally little means and maybe little knowledge of how to use the system to their advantage to put away money to cover the deductible when there’s often not enough money to cover life’s other necessities.

  14. This is my family’s 3rd year on a high deductible plan. With the wellness incentives, we’re saving almost $400 a month on on premiums, plus my employer kicks $1000 per year into my hsa.

    We live in a small community so there really is no price shopping. We have one hospital with one ER. If you’re lucky, one of any particular specialist you may need. Most gp’s are affiliated with the hospital now, so there is no price difference. The decision really is to utilize or not to utilize. A clinic visit costs sbout $180.

    I’m much more likely to pull back on care due to cost considerations than DH, but I think, between the two of us, we make pretty reasonable decisions about when to haul the kids on when they are sick. For the last two years or medical costs have hovered pretty near our “free money” amount. This year, with the baby being due in the first quarter and dd getting her tonsils out tomorrow, we’ll hit our deductible and probably our max out of pocket. So, any medical care the TLC family wants/needs in 2016, we’ll get.

  15. Fred – I think that many employers have been convinced that encouraging employees into HSAs will be a cost savings, so employers are willing to subsidize that option, often with direct cash deposits into the account on January 1st., so the math as you describe it comes out as a no-brainer. That’s all well and good, but I wonder if the studies showing that employees on the HSA use significantly less health care than those on the traditional plans have been completely ignoring the ‘yuge’ selection bias.

  16. One of the challenges of lowering the cost of care is that 1% of the population accounts for 30% of medical costs. I think HSA’s are fine, but that policy may be focused on the wrong column of the pareto.

    One of the best aspects of my FIL’s HMO was the services of a care coordinator during his complex cancer treatments.

  17. We have a high deductible plan ($4k individual, $11k family) and as a result I forgo care for myself and argue against DH going to the doctor when he’s got a virus or sprain.

    Nor do I pay the first bill I get, since I find that if I wait until the third that gives them time to correct the errors and negotiate with the insurer. I’m sure that little habit is not good for my credit score, though.

  18. ” I’m sure that little habit is not good for my credit score, though.”

    I wouldn’t worry about that. I think regular lenders (credit cards, car/home loans) are quick to post stuff to the credit bureaus but hospitals/doctors/systems are so used to elongated reimbursement cycles that you’re only going to get dinged if the bill actually goes to collections.

  19. Sky – I do that all the time, but without your conscious foresight. It might simply be four months before I bother to go through the mail. My credit score is 830, according to my credit card’s webpage. It takes a lot longer than three billing statements for them to notify a credit reporting agency.

    OTOH, I’ve never seen them correct a discrepancy between statements. In one recent case, the insurer rejected the bill from Patient First because #2’s DOB had been transmitted incorrectly, so PF simply sent me a bill at the non-insured rate (200% percent of the in-network rate). That took a phone call to Anthem, and I have to say that when I call them about an issue, they take over and resolve the whole thing, then call you back to report that it was fixed.

  20. Milo – I generally agree with you, especially for self-insured employers who actually only use an insurance company (in our case the local Blue Cross) to do the administrative stuff.

    My employer’s benefits rates (the ‘load’ on top of your salary that your department actually gets charged for having you around) have declined the last two years. No one wants to say it’s because the employer has paid less in medical because of HSAs, but I’m in a position to know the truth.

    My employer “only” funds $400 toward our HSAs, but every little bit helps.

  21. We have an HMO through my work. I don’t pay much attention to what the deductibles etc. are – I probably picked a pretty high one when I picked the plan, but don’t remember what else. I do get annoyed with the HSA (?) debit card when they ask for receipts/documentation, since IIRC the debit card was supposed to get rid of the documentation requirements present with the former system.

    Rhett – I agree. Sometimes I wonder how much $$ we spend on the administration of the administration of health care, and then I shake my head and don’t want to know.

  22. ” I do get annoyed with the HSA (?) debit card when they ask for receipts/documentation”

    Who asks? I just wonder because nobody has ever asked me, and I don’t keep good records anyway. As far as I can tell, there’s nothing but my own scruples preventing me from paying for whatever I want (TVs, boats :) )with my HSA debit card.

  23. “have declined the last two years”

    I was talking to my mechanic last week, and he owns the shop along with his two sons. He mentioned that he’ll soon go on Medicare, and his doing so will significantly reduce the insurance premiums for all of them. He was under the impression, possibly erroneous, but I don’t know, that all of them were being penalized for having one 65-year-old on the plan.

  24. I have only started using the HSA debit card regularly in the last year or so. Before then I played the ‘charge it on my regular card, take the rewards and then reimburse myself from the HSA’ game but finally decided that meant keeping better track of everything (what got reimbursed, when etc). this way I just toss all the receipts/EOBs etc in the 2016 Medical folder which I can produce if ever asked.

    As far as I can tell, there’s nothing but my own scruples preventing me from paying for whatever I want (TVs, boats :) )with my HSA debit card. Just the (perhaps idle) threat that you could be asked for documentation.

  25. Maybe he means the overall premium cost to the shop by having one less person to pay for. IIRC the ACA stopped the determination of premiums based on individual risk factors.

  26. We have high healthcare usage due to one expensive chronic condition, so we go with a non-HSA plan. If I were a bit more strapped for cash, I could see myself comparison shopping but I most assuredly would not skip medical care. From what I read in the article, the long-term outcomes for those lowering healthcare costs by reducing usage remain unknown. I suspect there are many unneeded visits and procedures when someone else is paying.

    I also usually wait until the third or so bill to pay because I’ve been burned a few times by paying before it all gets sorted out.

  27. $130 is too much for garden-variety pink eyedrops. It was probably something like Gatiflox? Sometimes expensive broad-spectrum coverage is required for people who wear contacts, have autoimmune disorders, or other intrinsic eye problems. As a care provider, it is easiest to prescribe broad-spectrum coverage for everyone, but really quite irresponsible. Ilotycin is available for less that $20 without insurance.

    As a care provider, it is easiest to prescribe broad-spectrum coverage for everyone, but really quite irresponsible. People often confuse generic with cheap. The presence or absence of a generic medication, does not always guaranteed that the medication will be affordable The focus should be on asking if this is the most “cost-effective” way to treat the condition. For the vast majority of health complaints, there are inexpensive, if not always convenient options.

    For example, the class of medications that is used to treat shingles, has two commonly prescribed medications. One is taken five times a day, one is taken three times a day. The five time a day medication cost four dollars for a complete course, the more conveniently dust medication may cost as much as $200. Both are available in generic formations, and the prices I quote above reflect the generic medication.And the prices I quote above reflect the generic medication. To make this even more complicated, none of these medications are effective if not started soon after symptoms appear, so any prescription is a waste of money.

    For a totebagger who is getting a new prescription, I recommend that before you leave the office, you should search on the Internet the name of the medication and the word “cost”. If it shows up as an expensive medication, it is worth bringing it to the providers attention that you would like to know if there is a cheaper alternative.

    For the general public, I recommend that you vote for Bernie Sanders and move towards a single pair health solution. Many people have neither the bandwith nor executive function to deal with this.

  28. Apologies for the repetition. My phone seems to do this copy and paste thing when I use voice recognition.

  29. When my kid was dx’ed with cancer, my employer plan (which was the primary under the birthday rule) was a HSA with a $10,000 out of network deductible (the in network was $5000 or something like that). My kid had to be treated out of network – the in network hospital rarely treated his cancer – so we sucked it up. We hit that $10,000 so fast it would make your head spin, but the costs kept mounting because the insurance paid only usual and customary which was way below the actual charge.

    Interestingly enough, a year later the company CEO’s wife was dx’ed with advanced breast cancer and eventually died of it. He was of course on that same crappy HSA. The very next year, he switched everyone to a “Cadillac plan”. He had had learned…

  30. Many people have neither the bandwith nor executive function to deal with this.

    Gee, I wonder why? Could it be how the system…the whole system is set up?

  31. I can think of three situations that I have worked in where there is a very low barrier to seeking emergency care. This is when I have worked for the federal government, when I have worked in an area where there are very wealthy people ( with excellent insurance and no ER co-pay) and in inner cities where there is broad Medicaid coverage or no ability to pay.

    Freestanding ERs are a financial boondoggle which caters to the middle group. These people will not wait 4 to 6 hours in emergency department to see if physician about a sprained ankle, but if they can get immediate service, their insurance will reimburse for the $2000 visit. We will see them again the next week for their sore throat. I highlight this because discussion of emergency service abuse often neglects to mention the role that the well-off have in shaping and straining emergency services.

    I believe there should be some barrier to emergency medical services. I’m not sure how to institute this in a fair play, but emergency department weights do you have the benefit of weeding out people who are only there for convenience. I think HSA’s do this as well

  32. Interesting discussion. I’m on my employer’s PPO plan. I’ve loosely run the numbers and not convinced that High Deductible would work well for my family which has an individual with a chronic condition and high specialty prescription costs. The HSA premiums are definitely not $29 a month (even the employee only cost is higher than that), and the employer does not put any extra money into HSA accounts. Since I’d be meeting the out of pocket max (something like $6000) in the first few months, I can’t see my HSA ever gaining traction to the levels that some of you describe without putting way more aside then what my current PPO premiums are. That being said, it is only a matter of time before the PPO goes away…sigh

  33. Fred – I agree. The amount of effort we expect people to go through to obtain basic medical services is ridiculous.

    For myself and my family, I am happy to have HMO insurance. We switched a few years ago, because I was continually frustrated by not knowing how much money was in our HSA, if we had used it up, what tests and doctors visits would cost. This was before the ACA, and we had small children who were frequently going in for vaccines and other routine care. My husband’s employer did not allow me to access the website which contained all the information I needed to make informed decisions.

    Eight days after switching to HMO we were hit with a sudden, severe illness in one of my children. She was hospitalized for over a month. I was extraordinarily impressed with the communication from the HMO, as well as our ability to have a medication covered which was considered experimental. While we were willing to drain our retirement accounts to pay the nearly $200,000 cost, I am ever grateful that we did not have to. Several months after she was discharged from the hospital, we received the bill. The charges were roughly $500,000, followed by insurance adjustments, and our portion was roughly $450. Not all HMOs work this well, but great ones provide an amazing service to their members.

  34. We switched from a local-area HMO I was really happy with to a PPO a few years ago when my oldest started college, as he was going out-of-state. Because the HMO coverage area didn’t extend that far except in emergencies, the college charged us an extra $3200/year to purchase their coverage. We switched to the PPO the following year and were able to waive the college medical fee. It’s been fine, but a lot of paperwork. I do like that we can now go to any specialty hospital we want, should we want to, which we couldn’t do under the HMO. We also have a Flexible Spending Account Visa, and I get asked for documentation of charges made on it all.the.time.

    Question: One of the reasons we got dinged my son;s first year was that I didn’t think we could change health plans mid-year – my understanding was that a child going to college did not qualify as enough of a “change in life circumstances” that would allow a mid-year change. I have since heard from others that they were able to do so. Does this vary by insurers or is it a standard thing and I was just misinformed?

  35. The bandwidth issue is not limited to this topic. If it were only this that required so much effort that would be one thing, but too many things require significant effort – from 401K selections, to various insurance, to what is the best electric provider, phone/internet/tv provider, etc.

    At a certain point, you either stick with what you have because there isn’t an IMMEDIATE or PRESSING reason to change or you default to the answer that is the easiest or fastest to implement.

  36. Our low-deductible PPO plan is very heavily subsidized, so our OOP medical costs in our relatively healthy states are minimal.

    On the pinkeye medication, last time DS got pinkeye, his ped gave us a sample of an eye drop she had in her office to take home. When I called back to say that it had spread to the other eye, and could I get a presciption, she said, “Oh no, you don’t want the drops I gave you. They are incredibly expensive with no generic. Let me give you the generic drops that work just fine.” They cost me $5.

    My FSA credit card works fine if I’m paying a medical provider directly or buying things from a major retailer like Walgreens or Target that have things listed as “FSA eligible” in their POS system. No additional documentation needed. I know HSA rules are different from FSA rules (aren’t OTC drugs ok for HSA’s?), but Walgreens must have that programmed as well, no?

  37. I should clarify what I mean. When i go to Walgreens, if I buy a prescription medication, some bandaids, and throw in some candy, when I swipe my FSA card, Walgreens will only charge the FSA card for the medication and bandaids. The remaining amount for the candy will need to be paid separately. Is that not how HSA cards work?

  38. I believe there should be some barrier to emergency medical services.

    They need to give triage the ability to tell people “you do not need to be seen in the ER, you need to go to the urgent care across the street” when it is appropriate.

  39. Hoosier, one of the ‘change in circumstances’ listed in our medical plan is “loss of coverage by a covered person”. I think that would be the way to make a change…once your kid moved out of the regularly covered area he lost his coverage so you’d be able to switch to other coverage midyear.

  40. I’m thinking we’re the only ones who never have any money in our HSA. As I said, we hit our deductible every year, and add in vision and dental expenses and we spend more than the maximum contribution. So at some point during the year, I just launder money through the HSA to get the tax deduction – deposit a lump sum for the max contribution and then withdraw it a few days later.

  41. We chose the middle of the road plan deductible. We could have gone with the high deductible because our healthcare usuage is normally well visits for our kids. Our main issue is finding affordable health care coverage for the in laws. They are healthy seniors but we worry that taking too bare bones a plan could prove costly if they got seriously ill.

  42. “They need to give triage the ability to tell people “you do not need to be seen in the ER, you need to go to the urgent care across the street” when it is appropriate.”

    This would work well in an area such as mine where there are only a couple of players (systems) who are vertically integrated from primary care physician to urgent care to ER and everyone in their system is in the same network. Then they can refer to another provider but the payment stays in the system. In larger metros those referrals might mean sending $$ out the door to a competitor. Not to mention the legal mandate, here at least, to treat everyone and worry about money later.

  43. They need to give triage the ability to tell people “you do not need to be seen in the ER, you need to go to the urgent care across the street” when it is appropriate.

    I agree. However, we also need a system that accepts that sometimes that recommendation will be made in error.

  44. “if they got seriously ill.”

    IIRC things like annual/lifetime benefit caps were removed by ACA. So what you’re really talking about is the annual out of pocket max that you might be facing. The less expensive plans require you to accept a higher OOP max, but don’t they all provide the same services?

  45. For those of you with HSA plans, are you factoring that into your retirement savings? I haven’t explored it much. Does anybody fund their HSA but then pay their medical expenses out-of-pocket?

  46. Fred – from what DH gave me to understand, MIL has to be monitored by a cardiologist and that doctor wasn’t in plan if we went with the cheaper plan. It is monitoring her heart to make sure she is fine without a pace maker.
    I try to offer suggestions but stay out of it since it is not easy to make decisions plus being the in laws adds to the complexity.

  47. For those of you with HSA plans, are you factoring that into your retirement savings? Not really; the tax benefits of the HSAs are greater than anything else (you get a tax deduction in the year of contribution and when withdrawn for allowed purposes, there’s no addback to income, like with an 401k, but again you can only use the money for certain things)

    Does anybody fund their HSA but then pay their medical expenses out-of-pocket? If we buy stuff that’s ok for reimbursement as part of a Target/grocery run I won’t usually transfer the $$ from the HSA to the regular checking account. But I’ll use the HSA debit card at doc/dentist/eye offices.

  48. L – There are both HSA’s and FSA’s in the corporate context – I always had to submit receipts to the contracted gatekeeper when it was a corporate FSA with a debit card. The reason for that is that FSAs were always use or lose on an annual basis. The gatekeeper got to keep a percentage of what was lost and reverted to the employer. I kid you not. If you misuse an HSA, all that happens is that the individual pays a penalty if the IRS catches you – there is no corporate incentive to monitor it unless one is built into the contract.

    I have an independent HSA I set up when I became a consultant. I made sure to charge the tooth whitening treatment to a regular credit card, although I probably could have gotten away with it on the HSA debit card. I definitely keep all the dental and dermatology bills because of the cosmetic treatments also available there. All of my charges are either to a doctor/dentist, for eyeglasses at Costco (where they take the HSA visa – the Amex exclusive doesn’t apply), or at a drugstore where the eligible items are all flagged on the receipt both paper and electronic.

    I am not aware, Hoosier, that one child leaving home for college out of area is ever a qualifying life event that permits a change of the entire family’s health insurance. However, employers can be more generous than the regs require, so it probably never hurts to ask. It is one of those things that when you bring it up, some smartypants will say, of course you have to change to a PPO or a national plan and we did it the January before Junior went to college. The amount of things you have to know in advance is mind boggling.

    DH has been on the granddaddy of HMOs in the Boston area since it was founded (I don’t care for the plan and I have always been PPO), and after age 65 went on Medicare advantage contracted with them. He is a huge consumer of medical services. Now, in addition to cardiac rehab, he gets to go to “balance” rehab at another facility. All covered. I am going to go on Medicare advantage with referrals to a “care circle” radiating from my primary at hospitals I already use, at least for the first year to see how it goes. Zero supplemental premium beyond Medicare B and Medicare D, but with copays and a 3400 a year max out of pocket. If we had a seasonal residence, we would have to choose a nationwide plan.

  49. I agree. However, we also need a system that accepts that sometimes that recommendation will be made in error.

    We already have a system that accepts that people can be seen in the ER and sent home in error.

  50. We have used urgent care a bit but the problem around here is that they close at 8:00 p.m. so if something happens after that time it’s off to the Children’s Hospital ER you go (which knock on wood has thankfully not happened in a long time). I did have the occasion to go over Thanksgiving with my sister and her baby. My niece was running a very low temperature and she called her pediatrician’s nurse’s line and they recommend that she take her in to be safe. I think it ended up costing her $500 out of pocket which she considered ok after all of the tests they ran (and baby was totally fine). I don’t think I would have ever taken my kid’s temperature if they didn’t feel warm so I blame overzealous first time parenting.

  51. “They need to give triage the ability to tell people “you do not need to be seen in the ER, you need to go to the urgent care across the street” when it is appropriate.”

    Why would the hospital want to turn away customers? To the contrary, they’re leasing billboard space advertising the low wait time in real time, advertising that chest pain is best checked in the ER, and installing free cappuccino and slushie bars.

  52. FWIW, my FSA card works more like L’s than Milo’s. Apparently, the IRS cracked down one year on FSA documentation, and in response these guys started demanding every freaking receipt. A few years later they ratcheted back, and now I hardly ever get requests unless it’s new/unusual (e.g., CVS is fine; eyeglasses/orthodontists get a request).

    Re: the article: I am surprised at the surprise — I had always *assumed* that “avoidance of care” was a feature, not a bug. How can you expect people to save money by doing their own research and choosing the more cost-effective option when they can’t *get* the information they need to make that choice? Makes no sense whatsoever. Ergo, since Congress did nothing to force disclosure of the necessary information, they are hoping that making people pay up front will reduce visits.

    It’s the “twelve jams vs. three” experiment. If I had one of those plans, I would want to spend as little $$ as possible to save it for future years. But optimizing my choices requires significant research into a seemingly infinite number options, each of which has a different and opaque cost structure, and none of which has any obligation to give me the information (much less make it easy for me). I think most sane people would end up in analysis paralysis and just avoid making a decision until the problem either went away or got so bad they couldn’t ignore it any more. Ergo, the natural end result is you save $$ by just not going to the dr — with the added joy of having to make the final decision when you’re in the middle of a crisis (*exactly* when you want to add more stress, and when you’re least likely to make the optimal decision).

    Could we save a grand or two a year if we “optimized” everything? Maybe. But with my PPO, I know who I can see and what it will cost me ($20 PCP, $30 specialist, $50 hospital), and I know exactly where to go and what to do if I need to find out something else. And I won’t even get that future savings if we have a high-cost year (which seems likely with kids). So why in the world would I take on all that added time and stress for such a small and unlikely reward?

    DH and the kids have Kaiser, and I could totally see the joys in switching to something like that, because everything is vertically integrated — there’s one 800-number to call with questions, everyone has the records, I never have to worry whether someone behind-the-scenes is out-of-network, they naturally seem to select the cheaper medications when available, etc. etc. etc. It’s definitely not perfect — we had one bad doctor, and DD’s foot surgery will need to be scheduled months in advance — but so far the ease of use and lack of surprise has really outweighed the downsides. Knock on wood.

  53. How can you expect people to save money by doing their own research and choosing the more cost-effective option when they can’t *get* the information they need to make that choice?

    My understanding was the employees had access to a web site that would give them the prices and they still didn’t shop around.

  54. So there was clear evidence of lower usage — was there any evidence that this lower usage led to an increase in morbidity or mortality or sick days?
    Not sure it’s necessarily a bad thing to discourage patients from seeking unnecessary medical care. It’s certainly much easier to justify a trip to the doctor when it’s “free.”

    But because the vast majority of health care expenses are racked up by a small percentage of the population in the last six months of their lives — and not by parents taking their kids to the pediatrician for viral illnesses — it’s not clear whether it makes any difference how patients schedule and pay for routine medical care.

  55. Another issue in this complicated bandwidth/capacity sucking mess is that most people don’t realize that JUST HAVING INSURANCE means they pay the rate negotiated by the insurance company and the provided. Real examples from my 2016 Medical folder:
    – 6 different lab tests: List Price $181 Allowed (negotiated) price $51
    – Office visit: List Price $141 Allowed (negotiated) $83
    Yeah, with my HSA I had to pay out of pocket the negotiated rates because I haven’t met my deductible, but the insurance negotiator saved me $188 vs list price. (of course I couldn’t find that out up front because the system doesn’t work that way). Maybe another lab and doc have lower negotiated rates for the same care.

    What struck me about the article was that the people were funded to 100% of their deductible on 1/1, so there was really no genuine out of pocket cost incurred from using medical services. Still most people treated it like vacation time…save it till the last possible moment.

  56. And also, knowing how to work the system or having the resources to work the system. The article talked about someone who doesn’t go to the doctor early in the year because there isn’t $$ in their HSA yet.
    If that were me, I’d pay with my regular credit card and when I got paid at the end of the month and my HSA got funded the $500 or whatever I’m socking away, I’d transfer the doc’s charges to my checking acct and pay my visa bill.

    AND, Since any specialist I’m going to see around here is part of the medical group at the major hospital in town, I know that if the charges are > 1 month’s HSA deposit, I can easily work out a payment plan with the medical group to pay over e.g. 6months. No paperwork, nothing. I just have to ask for it. Most hospitals are like that. Most, not all. But most people don’t know that, so they don’t know to ask to set up a payment plan.

  57. I’ve been MIA because we are dealing with a family health crisis right now. DH stepmother is sick and in the hospital. His father can’t stay alone due to chronic medical problems.

    We went from no problems to major health crisis in less than 48 hours during the holiday weekend. The problem is that she doesn’t believe in doctors. One problem is that she is late 60s and has never had routine screenings such as colonoscopies, or mammograms. As a result, her condition is already very complicated.

    We’re scrambling to get his father to the hospital each day and he’s staying with other family that lives closer to the hospital. We will need a long term solution for both of them, but we can only make decisions for my FIL. Big mess.

    We’ve used employer PPOs,and we never choose the high deductible because we always have something happen each year.

    Our dental expenses are really high every year and we wish we could put more in FSA to cover because our insurance covers 50% of major work with annual max.

  58. This is a fascinating discussion.

    We have excellent insurance through DH’s employer. Until 2013, we’ve paid more into it than we got out. Fertility treatments + my high-risk pregnancy + DS’s birth/NICU stay list costs combined were upwards of $500k (negotiated costs were probably in the $150K range). We paid maybe $500. Total. And mostly for fertility treatments.

    On waiting to pay bills – this is my practice. I won’t pay a bill unless I’ve seen an EOB for the treatment. If no EOB, no payment. This usually takes 1-2 billing cycles. There have been times when I’ve had to call. During my pregnancy, I received a $2500 bill from the hospital prenatal clinic. Somewhere the clinic received my outdated insurance information. The clinic billed the insurance incorrectly, then, after rejection, billed me. I called our insurance and explained. Within minutes (seconds, really), the insurance said “don’t worry about it, it’s covered, we’ll take it from here.” I never felt such love for an insurance company ever.

  59. I’m not on a high deductible/HSA plan because neither my nor DW’s employer offers that option. If we were offered it, I would lean strongly toward it.

    “Does anybody fund their HSA but then pay their medical expenses out-of-pocket?”

    I’d lean toward this if I had the option, as it appears to me (I haven’t looked into this much since it’s never been an option for us) there are tax advantages for doing so.

    I’m curious, if you do this, can expenses you pay out-of-pocket then be taken as tax deductions?

  60. “Why would the hospital want to turn away customers?”

    I’m guessing there are a lot of ERs that have a lot of uninsured people show up, and they have to treat those people at a loss.

    I’m guessing that one reason for the opacity of medical costs is that it’s so socialized, and charges are often adjusted based on what you, or your insurance company, can or is willing to pay.

  61. “I’m guessing there are a lot of ERs that have a lot of uninsured people show up, and they have to treat those people at a loss. ”

    OK, you jogged my memory when you said that. My cynical physician family member is the one who told me about the slushie machines. Those go in the ERs in areas that serve a population predominantly insured by Medicaid, so the slushie machines have the same purpose as the Happy Meal Toy.

  62. “Perkin-Elmer (the provider)”

    I did not know they were in the medical business. I’ve long associated them with photolithography equipment.

  63. “I never felt such love for an insurance company ever.”

    Some are better, way better, than others.

    But the real truth is a minority of people/patients/caregivers have the ability and inclination to dive in with both feet and fight the overly complex system, or maybe even ask clarifying questions or be good advocates. We totebaggers with at least a BA/BS (and I’d venture a majority of us have >1 degree), are the people who know how to play the game, or at least are willing to try.

  64. Finn – I’m not sure. Are you asking about the deduction if you spend more than 10% of your AGI on medical? I’ve never looked into that.

    I go to the dentist for cleanings every 2 months and see the dentist every 6 months. My dental plan doesn’t cover the cleanings. I write a check and get a 10% discount on the cleaning. I could then submit the expense to my HSA to get reimbursed. I typically don’t though. Right now, I’d rather leave the money in my HSA and build up the balance. Because my insurance doesn’t cover the payment and it doesn’t go against my deductible, my HSA doesn’t automatically pay it.

    I’m thinking that I could eliminate the direct payment to the provider from my HSA and then write a check out-of-pocket to the provider. I could leave the balance in my HSA and let that accumulate until I’m 65 and then use that tax-free for medical expenses in retirement. I hadn’t thought about doing that until today. I haven’t spent much time looking into how to invest my HSA dollars too. Some plans have higher costs for managing investments. I need to add this to my list of financial things to do.

  65. We’ve used employer PPOs,and we never choose the high deductible because we always have something happen each year.

    I find that interesting because that’s the reason we choose the high deductible option. Our analysis during open enrollment is to take the out of pocket max and add the total monthly payments, and pick the lowest one, and that has always been the high deductible plan.

  66. e.g.:

    Here at Dayton Children’s we strive to give your child the best care every time you walk through our doors. With interactive waiting rooms and slushie machines in the halls, our emergency department is kid friendly and our staff works hard every day to make what can often be a very frightening situation, a little less scary.

    http://www.childrensdayton.org/cms/emergency_urgent_care/index.html

    I don’t think that their CFO has “Investigate possibility of adding ER triage system” high on his office whiteboard to-do list.

  67. Those go in the ERs in areas that serve a population predominantly insured by Medicaid, so the slushie machines have the same purpose as the Happy Meal Toy.

    And Medicaid reimbursement rates are terrible, aside from primary care. So many specialists won’t see Medicaid patients because they lose money on them.

  68. “We totebaggers with at least a BA/BS (and I’d venture a majority of us have >1 degree), are the people who know how to play the game, or at least are willing to try.”

    Finn – exactly. It’s all about bandwidth. Up until ~2013, my insurance was there primarily if I needed catastrophic care. And I would have benefited from a HSA. Since then, I needed to learn a lot quickly (often at the expense of doing my paid job some days). If I were an hourly worker with no reliable access to the internet (save the library), and an office door I can close for privacy, I would never have been able to do it. Even if I was a totebag level employee somewhere who just couldn’t handle that amount of executive function, the Sisyphean task of dealing with doctors and insurance companies would be out of my reach.

    And my love for my insurance company – yup. This is my 5th (6th) company… by far the easiest to deal with. And the reason is three letters in front of our policy number. Without those letters, in their specific combination, my insurance company becomes a beast. DH is not allowed to leave his job ever because of the insurance.

  69. Lauren, that sounds really stressful. Can you start the paperwork to get POAs for them, or have you got those? Either way, best of luck managing everything.

    I may be headed your way for a funeral this weekend and will be sending a virtual wave to you and Mooshi.

  70. Milo and then there’s this, 3 miles away:
    Why Miami Valley Hospital?
    The specialized staff at Shaw Emergency and Trauma Center at Miami Valley Hospital (MVH) provides quality care for 90,000 visitors a year. Expert surgeons and specialists are always available, 24 hours a day, seven days a week. HealthGrades ranked Miami Valley Hospital in the top five percent in the nation for Emergency Medicine in 2013-2014.
    The 72-bed Emergency Department has private rooms for all patients, and has a pod concept that brings caregivers closer to the patient. The facility was updated in 2013 to adapt to industry changes and decrease wait times by improving patient flow. X-ray capabilities are available in the trauma bays and the unit also includes its own imaging facility so patients can get a computed tomography (CT) scan without moving elsewhere in the hospital. The dedicated Stat Lab is open 24 hours a day for immediate testing and results. We are focused on getting the patient the right care as quickly as possible.

    I know which one I’m picking.

    And I agree with the CFO comment.

  71. Sky, DH is dealing with it for now. We’re set on his dad, but she has her own children. That part is out of our control. That’s why I’m concerned that this is going to get very messy once she is released from the hospital.

  72. Lauren, is your FIL still at a point where he will miss her if they live apart?

    An elderly couple we knew had to be in separate nursing homes because there were no beds available for the wife where the husband had been sent (he got sick first). Unfortunately they were lucid and both miserable about it, but NY Medicaid didn’t care and they lived apart for about a year before the husband died without seeing his wife again. Neither were in a state to be transported by the family in a cab.

    That is one of the reasons I’m going to try to get our parents to pick an assisted care complex with a connected nursing home.

  73. tcmama – I know many in the insurance world who are hoarding the HSA dollars and pay everything out of pocket. They view the HSA as a retirement account. However, these individuals have launched all their dependents and have enough liquid savings to pay the $10,000 out of pocket max. But a family with two kids in daycare paying $20,000+, who already is saving away for retirement would probably want to spend the HSA dollars now, and use the $10,000 for family vacations (at least that is what I would want to do).

  74. I know many in the insurance world who are hoarding the HSA dollars and pay everything out of pocket.

    I think that goes a long way to explain Trump/Sanders. They system is set up to give advantages to those who are already so far ahead.

  75. “I think that goes a long way to explain Trump/Sanders. They system is set up to give advantages to those who are already so far ahead.”

    “However, these individuals have launched all their dependents and have enough liquid savings to pay the $10,000 out of pocket max. But a family with two kids in daycare paying $20,000+, who already is saving away for retirement would probably want to spend the HSA dollars now, and use the $10,000 for family vacations (at least that is what I would want to do).”

    One way a lot of totebaggers got ahead was by not having kids when young, allowing them to accumulate enough liquid savings to pay the out of pocket and thus take advantage of the tax benefits available via HSA before kids.

  76. “The system is set up to give advantages to those who are already so far ahead.”

    Yes, think about retirement contribution limits:
    If you defer income from your employer:
    •The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $18,000.
    •The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $6,000.

    SEP IRAs and Solo 401(k)s. For the self-employed and small business owners, the amount they can save in a SEP IRA or a solo 401(k) remains at $53,000 for 2016.

    The SIMPLE. The limit on SIMPLE retirement accounts for 2016 is $12,500 for 2016, the same as in 2015. The SIMPLE catch-up limit is still $3,000.

    But if you do it yourself (oh and this can be in addition to the 401k above)
    •The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

  77. One way a lot of totebaggers got ahead was by not having kids when young, allowing them to accumulate enough liquid savings to pay the out of pocket and thus take advantage of the tax benefits available via HSA before kids.

    Right, they are ahead of the game so why do they need extra help?

  78. Piling on Fred’s comment, it is really difficult to set up a retirement plan to contribute for employees for a small business. We don’t have many employees, but we have set up SIMPLE retirement accounts for the employees and ourselves. It is insanely difficult to understand and to go through the mechanics of setting up the accounts. Granted, we have a small business, so it’s probably not very renumerative for Vanguard to deal with with, but it really should be easier to set something like this up.

  79. re the retirement contribution limits above…I think this really comes down to who votes.

    “We” (League of Women Voters, maybe some other groups) complain about low voter turnout, and ON AVERAGE it’s pretty abysmal except in places like Iowa, Minnesota. But if you stratify by income, like many other things, the higher SES folks probably vote at a much higher rate than the lowest quintile income folks (no data, no link; I’m willing to accept if wrong). And so they get retirement savings options ranging from $12,500 (SIMPLE) to $53k (SEP-IRAs). A lower income person working at a place without a retirement plan…wow, they get to put away all of $6,500.

    (Now that may be a pipe-dream but nonetheless, why’s the limit so low?)

  80. I can’t for the life of me understand why the limit isn’t a total yearly retirement contribution limit . You should be able to put a total of $18k in an IRA or a 401k at your discretion.

  81. A lower income person working at a place without a retirement plan…wow, they get to put away all of $6,500.

    The Trump/Sanders voters.

  82. You should be able to put a total of $18k in an IRA or a 401k at your discretion.

    Yes, and if your employer wants to put some of that contribution in for you, it should not be insanely difficult.

  83. Cordelia – it seems like for the small business market as a whole, there would be great value to Vanguard to put together a plug & play type offering for you. It’s kind of nuts. There are so many small businesses out there. I’ve heard this from other small business owners too. Doesn’t technology allow them to put together something that doesn’t require a ton of hand holding from one of their advisors?

  84. “Doesn’t technology allow them to put together something that doesn’t require a ton of hand holding from one of their advisors?”

    I don’t know if it is a technology issue, a regulatory issue, or if it just doesn’t make them enough money. Last year was traumatic enough that I have been putting off figuring out how to make the contribution for this year. This week, I have been banging my head on the keyboard and trying to get through the voicemail. It doesn’t help that part of the requirement is that the employees have to set up email and electronic accounts, which some of them are completely unfamiliar with.

  85. +1 Ivy.

    And since Vanguard touts their low cost index funds, you’d think they could have the barest-bones, yet prudent, investment products like:

    – Intermediate term bond index fund
    – Total Stock Market Index
    – Total International Stock Index
    – Total International Bond Index

    That’s it! 4 funds! Plug & Play! Customers for life.

  86. The products are there, it is the mechanics of figuring out how to set up the accounts. Last year, it was extremely difficult to get an Vanguard person on the line or to go through the website. This year, well, I’ve been procrastinating on the Totebag a lot this week.

  87. When I was setting up the 401(k) plan for my new business, Vanguard very frankly told me they are not interested in working with small businesses (which they defined as fewer than 50 employees) – not enough $$ in it for them, unless the employees are rolling over enough to exceed $10 million from day one. I finally talked to Schwab, and they were excellent. Wish I had called them first.

  88. “You should be able to put a total of $18k in an IRA or a 401k at your discretion.”

    Plus employer matching, oh, and profit sharing. ;)

    Cordelia – DW has set up and administered a 401(k) plan with profit sharing for a small contractor. It’s one of her many talents. They go through Schwab. The profit sharing gets tricky because of IRS regulations.

    It’s doable, but it’s not as carefree as it probably should be.

  89. Sky, not sure about FIL living without her, but it became a moot point today because she is dying.

    The doctor found cancer in a couple of other major organs outside of the colon.

    PSA for today: go for screenings!!!!!

    She never had a colonoscopy or any other preventative care even though she had great health insurance. I found out today that she was paying extra to supplement Medicare and she never went to doctors!!! We will help them get re settled back in their home with part time help. My FIL has been through terminal cancer before with his wife so he was very pragmatic today. We will deal with the conversations about moving him to assisted living at the appropriate time because this is so overwhelming.

    I can’t believe I just wrote that post less than a week ago here about elder care becoming overwhelming in an instant.
    Our lives and plans for the next 12 months will be completely different now.

  90. Lauren– More good thoughts to you & your family.

    I’ll also add the obvious thing about bandwidth– even things that normally we can handle just become tougher when one of you is sick. I’ve certainly battled my share of bills over the years, but it becomes tougher. When I had a super-high fever and horrible strep throat and I stumbled into the doctor, I didn’t ask any questions about my prescriptions because I was too out of it to really bother with the details. (And I wasn’t exactly sick enough that my DH also needed to miss work to accompany me.)

    We’re still on a PPO and I’m grateful for it. I had a serious emergency medical situation, and ultimately the bills from that came to over $400,000 as negotiated by the insurance company. They were in-network and our contribution– shockingly– was zero. We got hit with a $1200 bill from the ambulance company because they were out of network, and their charge was higher (go figure) than the negotiated rate our insurance had with the in network providers. As though we had a choice! But at that point we just paid it because we were relieved that the rest of it had been covered. Most years we are basically just using preventative care, but catastrophic costs total up fast. I also noticed that the out of pocket maximums are much higher for out of network care. I was lucky I was brought to an in-network ER. In a circumstance like that, there’s no shopping around available.

  91. Lauren – sorry to hear about the elder care situation. My in laws have not gone to the doctor for screenings of any kind – even though they have good insurance. My MIL’s irregular heartbeat was discovered during cataract surgery and had to be addressed because the doctor refused to operate on the other eye till he got an OK from the cardiologist. At least she saw the inside of a doctor’s office, my FIL flatly refuses and it will be an emergency situation when he does.

  92. Lauren, I’m sorry about your crisis and wishing you all the best. Your FIL’s pragmatism serves him well, but I’m sure there is much sadness in this situation. I think we all know people who simply refuse to go to the doctor except in emergencies, and there’s usually nothing we can do to force them to go. Your reminder is helpful to me as I’ve been neglectful in recent years.

    Rhode, I was wondering if your DS is facing additional treatment/surgery soon. It sounds as if his progress has been good up to this point, hopefully better than what you had imagined it could be back when this all began for you.

  93. Lauren – Thinking of you. This is one time when having money is helpful, because you can act unilaterally, engage a senior care manager to oversee at least his situation and make sure that your FIL’s medical conditions are addressed by a daily, if necessary, visit from a home health aide and that food and housecleaning are provided to both of them. And all this can be done even if his wife’s family is less well off or farther away or unable to act quickly or in agreement. This very scenario is what I fear for my husband – a stroke or accident puts me out of commission – but it would be my children or his former wife who would end up burdened with keeping things going on an emergency basis. (I guess I had better get the updated documents that provide for this eventuality back to my attorney for execution very soon.) But as we discussed the other day, somebody has to be the go to person locally, and you and your DH have multiple elders all in need at once.

  94. So sorry, Lauren. Thanks for the timely PSA — I’m turning 50 (in, umm, a couple of days) and so have had “get screenings” on my back-of-the-brain list. I suspect I resemble your stepmom a little too much, so this is a very, very good reminder to just go face up to some annoying stuff that it’s too easy to put off. Will be thinking of you and sending good thoughts your way.

  95. @Cordelia — my mom went through the same thing trying to set up a retirement account for her consulting business. It sucks when things are so complicated that it gets in the way of people who are trying to do the right thing.

    I truly don’t understand why they have to keep coming up with new versions of programs — the policymakers obviously just have no clue that adding another layer of complexity is going to hurt more than help. There should be one kind of program per person, with one flat limit, that isn’t dependent on your employment status or the whims of your employer (or the resources and cleverness of your accountant to work the system and find you a better alternative).

  96. On topic, my husband has an HSA, and for the large expenditure I attempted to cost shop. He had an ACL surgery a few years ago, and the doctor could do it at the hospital or one of two clinics where they do just minor same-day procedures. I provided each his insurance info and tried to get rates. Part of the problem is they can only give you their costs. Then you have to find out who the anesthesiologist is at each place, and if they are on your insurance. Same with the radiologist, and whoever else is involved. It was such a pain. Then they want payment on day of surgery, when most of his deductible had not been met. By the time the filed with insurance I had paid some of the other bills, also calculated before deductible had been met, so then I had to spend months tracking down refunds from those who had been overpaid. Several admitted that they won’t just mail you a refund – if you don’t come ask for it they just sit on it. (Presumably escheat laws make them return it eventually). When I had my son with an HMO, I paid $5 on my first visit and nothing else, including delivery and multi-day hospital stay. The HSA is his only option, and neither his or my HSA are nearly as cheap as some of you describe. Mine is more than my PPO, and given the experience with my husband’s surgery, I’m not inclined to switch.

  97. Lauren – my thoughts and prayers to you and your family.

    On topic: “I was lucky I was brought to an in-network ER. In a circumstance like that, there’s no shopping around available.”

    This. I ended up in a fight with my provider and insurance company during fertility treatments. Mid procedure the doctor (NP, tech, the person who did the procedure) changed – the first person couldn’t get things to work right, so they called in back up. The second person is the one who was billed. The practice, and the first person were in network. The second person was not. I got billed full freight. At the end of the day, I won. But really, who has a choice like that? Was I supposed to stop everything and request credentials? I asked the insurance company that question (different from DH’s excellent insurance) and they said “yes, since it was scheduled, it could rescheduled.” Sure… let’s stop everything mid-stream on a time-sensitive thing… sure. Good thing it wasn’t surgery.

  98. Lauren – I’m so sorry. My dad also never goes to the dr. that I’m aware of even though he has insurance.

    After this conversation I looked at my husband’s insurance plans which we will be switching too when I quit my job. We’ve always had an HMO or PPO. The HSA plan is $600 per month and the PPO is $900, with an out of pocket max of $7K per family. I don’t know that that is enough of a difference in premium for me to potentially be facing an additional $7K in expenses. We’re not big users of medical care so it may be smarter to go with the HSA but we also have three kids so you never know. I thought that the HSA’s had significantly lower premiums but this may just be my husband’s work as their known for their expensive medical plans (law firm that self-insures so not a huge huge pool of people).

  99. “There should be one kind of program per person, with one flat limit, that isn’t dependent on your employment status or the whims of your employer.”

    We have that; it’s an individual IRA. But if that’s all we have, Cordelia would not be able to contribute directly to their employees’ retirement accounts.

    “OK, fine” you might respond, “add a basic 401(k) with one limit for everyone.”

    Alright. That’s an idea. But is this limit in addition to or independent of IRA savings? If it’s independent of, Rhett complains that there’s a higher limit for people with better jobs. If it’s in addition to, there’s a major layer of complexity for the plan administrator to somehow ensure that the total contributions, including individual IRA contributions, do not exceed the cumulative limit. Then what about the people who have joined the company mid-year?

    It just goes on and on, even if you try to simplify it.

  100. I truly don’t understand why they have to keep coming up with new versions of programs

    To keep the little guy down.

    From Sen. Cruz:

    Third change that I think is absolutely critical is to allow taxpayers to have a portion of the Social Security funds go to a personal account that they own and control.

    If it works out as well as the 401k/IRA system then totebaggers will have millions and the average Joe with have pissed away/mismanged it and be out on the street.

  101. If it’s in addition to, there’s a major layer of complexity for the plan administrator to somehow ensure that the total contributions, including individual IRA contributions, do not exceed the cumulative limit

    How so? They don’t check that now.

  102. Lauren, sorry about your crisis situation. It is very hard to manage this stuff long distance. Meme’s idea is great if resources are there.

  103. Then what about the people who have joined the company mid-year?

    How do you think this works now?

  104. Tcmama – sorry, it was $7K for the HSA, I didn’t write that clearly. The PPO just has the normal co-pays.

  105. “How so? They don’t check that now.”

    That’s because the limit between IRA and 401(k) is independent.

  106. “How do you think this works now?”

    I’m not exactly sure on that one, but it’s part of the complexity.

    These things are not to “keep the little guy down.” They’re often well-intentioned to do just the opposite. They add regulations to limit the proportion of profits and contributions that go to “highly compensated employees” vs the rest. They have a higher limit for the old folks.

    It’s just that all these well-intentioned changes add complexity. Big government types are forever underestimating the costs of dealing with complexity in regulations, whether that’s financial cost to a business, or bandwidth costs to the little guy.

  107. That’s because the limit between IRA and 401(k) is independent

    Are you being intentionally obtuse? You put money into an IRA and the IRS gets form 5498. Your 401k contributions are listed on your W-2. If I work two different jobs in one year I could put 18k in two 401ks and 5k in two IRAs. The IRS computer is going to go Heh! I have two W-2s here and both have 18k listed in box 12D and I have two form 5498 with 5k contributions each.

  108. Lauren – I’m very sorry for you and your family.

    Atlanta Mom – do you have a per person deductible, or is it just $7,000 out-of-pocket completely? If you funded an HSA even with the $300/month savings between the two plans, that would get you most of the way towards your max out-of-pocket (fingers crossed you don’t need). If you maxed out the HSA for the year, I think it is roughly $6,500 for a family, you’d have most of the max out-of-pocket tucked away. You’d also get the tax savings of using an HSA. Over time you’d be able to accumulate enough in your HSA to at least always have money to cover expenses. You’d be saving the $300/month on premiums.

    One thing when I did the comparison on my PPO plan vs. my DH’s high deductible plan was asthma medication. On the PPO, it cost $14/month. On my high-deductible plan it was $400/month. I didn’t know until after we didn’t need the prescription any more that Walgreens and the drug companies have coupons and discounts available. The $400/month for medication was about equal to what I’d pay for PPO premiums. The math still worked for the HSA though because our premiums were only $35/month. I have an HSA option at my work and the premiums are not much cheaper than the PPO. I also like my DH’s plan because it is much easier to understand what I owe vs. having coinsurance up to a certain amount etc.

  109. Lauren, our thoughts are with you and your family.

    On the preventive care aspect, even doing all of it faithfully still doesn’t guarantee anything. My mom did everything “right”, and when her lung cancer was discovered, it was already stage 4 and inoperable. It’s not something that gets picked up on the current routine screening tests.

  110. Atlanta – given what you’ve shared, I’d stick with the PPO plan if I were you.

    I think the reason the HSA is so attractive to me, and a lot of other employees here, is that the HSA premiums are so low (like <10% of the PPO plan) so that if people take the difference between the two premiums and contribute that to the HSA, they've gained control over a pretty substantial amount of $$ (like $4200). Our HSA OOP max is something like $7k, and our PPO isn't always just a copay, some things are 90/10. I've done the math every year for the last 5 years or so and in every case the OOP max is reached sooner with the HSA.

  111. These things are not to “keep the little guy down.”

    Sure they are, the 401k system started as a tax dodge for highly compensated employees. It’s only by accident that its come to make up such a large part of the retirement system.

  112. Right, but the 401(k) limit and IRA limits are independent of each other.

    I thought that yesterday when you said that there should be one limit you meant to cap the sum of the two, so that the generally more affluent people who have access to an employer plan would not have a higher deduction limit than those who only have IRA access.

  113. @Milo: I mean one thing, period, with the same cap per person — why should the amount you are legally allowed to save tax-deferred depend on your employment status and the whims/plans of your employer? Let’s call it an IRA. Let’s make it a $20K annual cap, $25K if you’re over 50 or whatever. If your employer wants to make a contribution, it can, but they mostly won’t, because it’s logistically more complicated. If you want an incentive for people to contribute, then direct tax refunds to the account, unless you check the box on the 1040 that says you want to opt out and take the cash.

    I think the company-run 401(k) is a hangover from the days of the pension — why should the amount you are legally allowed to save in a tax-deferred retirement depend on your employment status and the whims of your employer? I mean, everyone loves 401(k)s, because in our era of “personal responsibility,” we are the ones who control our fate and decide how much and what to invest, instead of relying on a corporate nanny state. Yay, rah, go team go. But if you look at the system as a whole, it is so complex that it is completely stacked in favor of the “haves,” because we’re the only ones with the knowledge and resources to take advantage of it. I make out like a bandit, not just because I get paid a lot and have money to save, but because I have a job with an extra profit-sharing account and an employer who decided to maximize its highly-comp employees’/owners’ ability to defer taxes. Most others who work in a company are limited to the 401(k) max because their employers aren’t set up the same way mine is. Some people who work for themselves or own their own companies (or are in the C-suite of bigger companies) have even better plans that allow them to put hundreds of thousands of dollars away every year. And then many others don’t have a 401(k) at all.

    I think, if we’re going to advocate for personal responsibility, we should at least start with a level playing field. Because right now, how much people can sock away tax-deferred is driven as much by their employers’ choices as their own.

  114. I thought that yesterday when you said that there should be one limit you meant to cap the sum of the two, so that the generally more affluent people who have access to an employer plan would not have a higher deduction limit than those who only have IRA access.

    Right. The IRS computers would say do I have any Form 5498s? Yes. Do I have box 12D filled out on any W2s? Yes. Is the total less than or equal to 18k? Yes. Then Ok. Is the total greater than 18k? Yes. Send out a form letter asking for an explanation.

  115. TcMama – It’s 7K total for the family out of pocket max. I have a few months to think about it but the HSA at my work is about a third of the cost of the HMO with the same out of pocket max, so I was just surprised that it was still $600 per month at DH’s work. I just need to accept that our insurance costs are going to rise.

  116. LfB – I don’t disagree with your assessment of the differing levels of advantages.

    But your plan:
    ” Let’s call it an IRA. Let’s make it a $20K annual cap, $25K if you’re over 50 or whatever. If your employer wants to make a contribution, it can, but they mostly won’t, because it’s logistically more complicated.”

    Is not going to help the little guy one bit. All the research that we’ve discussed on here talks about the benefits of retirement saving being the default choice that one has to opt out of rather than opt in. Make it automatic contributions to a target date fund, start at X% and increase it a bit with each raise so they’ll never notice it.

    Now you’re saying that the rich are making out too well, so the solution is to scrap the whole employer retirement plan altogether. That might make the affluent pay a little more in taxes, but it’s not going to make the little guy better prepared for retirement. I don’t want to reduce inequality by knocking the top lower.

  117. Is not going to help the little guy one bit.

    So, just so I understand. You’re opposed to a unified contribution limit? Why?

  118. “Then Ok. Is the total greater than 18k? Yes. Send out a form letter asking for an explanation.”

    And there’s the complexity that we’re simultaneously decrying. DW gets a letter from the IRS that she allowed an employee to over-contribute to his 401(k). Now what? Reduce his contribution? What happens to that money? What about if it’s part employer contribution?

    Sending out a letter is the beginning, not the end.

  119. “You’re opposed to a unified contribution limit? Why?”

    Not necessarily opposed, just saying that it’s no as simple as “they should have a unified limit AND make this whole thing a lot simpler AND look out for the little guy”

  120. And there’s the complexity that we’re simultaneously decrying.

    It’s the same system we have now. How is it more complex?

  121. “It’s just that all these well-intentioned changes add complexity. Big government types are forever underestimating the costs of dealing with complexity in regulations, whether that’s financial cost to a business, or bandwidth costs to the little guy.”

    I think we are in violent agreement here, as this is exactly my concern. The more you try to “fix” problems by adding new programs, the more you actually hurt the people you’re trying to help, who don’t have the knowledge or support or bandwidth to take advantage of it.

  122. The IRS computers are currently checking the Form 5498s and 12ds. How is the unified limit more complex?

  123. “How is the unified limit more complex?”

    Because right now DW has no reason to be concerned about the amounts their employees are contributing to their IRAs. A unified limit would add that as an additional layer of complexity.

  124. A unified limit would add that as an additional layer of complexity.

    How so? The matter would be between the employee and the IRS.
    .

  125. Ideally, we’d only have one account. You’d get hired and you’d give them your retirement account number for your retirement contributions and your bank account number for direct deposit. The 401k would be rolled into a unified IRA. One account, one limit.

  126. “I don’t want to reduce inequality by knocking the top lower.”

    And I don’t want the MC to subsidize extra tax-deferred savings for the wealthy. You say to-may-to, I say to-mah-to.

    People can still save as much as they please, and the wealthy will still have plenty of extra to save. Why do I deserve a tax deduction for @$50K of income, when others are capped at 1/10th that?

  127. I think the company-run 401(k) is a hangover from the days of the pension

    I assume they are also a holdover from the pre discount brokerage era when opening a brokerage account was a big deal with a lot of hand holding vs. today when it’s all automated.

  128. I’m in meetings all day yesterday and today so this is a couple quick comments.
    First on high deductible plans–just pray you never have to go out of network. In our plan, the OON deductible is $20,000 per person, and you can be balance billed by the provider. So if you have an OON provider, your bills can easily be in the six figures.
    On retirement plans– you have no idea how the IRS complicates things that are meant to simplify. A few years ago Congress came up with safe harbor plans –make a 3% contribution for all your employees and we’ll exempt you from all kinds of regulations. Then the IRS got hold of it and added so many counter-intuitive complicating details and requirements that its almost impossible to keep straight.

    So a single limit sounds good–but just wait until the IRS gets hold of it.

  129. “I don’t want to reduce inequality by knocking the top lower.”

    I do. If you’re already doing really well you don’t need any extra help.

  130. Except for the people named on our public filings I don’t think there are very many people here who can sock away more than the legal max $18/$24k + the employer contribution which, yes, is a % of salary. So the more you make, the more the employer kicks in (not a match). If the board/top mgmt felt it were important they could set it up as a flat amount/employee since it’s not tied to individual contributions to the retirement plan, but they don’t.

  131. I totally agree with L about contribution limits. There are some years where I have only had a 401K, some years where I have had a 403B, some years where my husband has not had a 401(k), and many years where I have some income that can go into an SEP. Our family’s ability to have tax deferred savings for retirement has varied between 18,000 per year and nearly $100,000 per year. This is with relatively stable income. Its ridiculous.

  132. Atlanta – given what you’ve shared, I’d stick with the PPO plan if I were you.

    I think the reason the HSA is so attractive to me, and a lot of other employees here, is that the HSA premiums are so low (like <10% of the PPO plan) so that if people take the difference between the two premiums and contribute that to the HSA, they've gained control over a pretty substantial amount of $$ (like $4200). Our HSA OOP max is something like $7k, and our PPO isn't always just a copay, some things are 90/10. I've done the math every year for the last 5 years or so and in every case the OOP max is reached sooner with the HSA.

    Atlanta, you’d save $3,600 in premiums on the HSA. So if you anticipate total expenses below that, then go with the HSA. Keep in mind even though you are paying “full price” for dr visits, it’s still the negotiated amount, not the billed amount. Even at $120 a visit, that’s 30 appts.

    On the PPO, are major expenses like hospitalizations and ER visits still a flat copay or are they 90/10 or 80/20 or something? If it’s the latter, then one incident can wipe out the advantages of the PPO. And what is the out of pocket max on the PPO?

    Obivously this is a pain in the rear, but the best thing to do is go through your medical care from last year and compare the costs under each plan and see the difference. And also compare the total cost for each if you were to reach the out of pocket max. Make your decision from there.

  133. Thanks Denver, Fred and TCMama for your input. I’ll have to look but I think hospitalizations and ER are a flat co-pay on the PPO but can’t remember what those amounts are. Regular wellness visits and vaccinations, etc. are 100% covered on all plans. Typically we only visit the dr. maybe once per year per child for a sick visit and DH is probably once too. Me never (knock on wood). So worst case scenario, we have a bad year and pay $14,200 on the HSA plan vs. $10,800 on the PPO plan (+ a few hundred $ for co-pays). For a typical year it would probably be less than $1K in out of pocket costs on the HSA. The HSA just doesn’t seem to be as clear cut of a financial winner as it would be at my work..

  134. “You say to-may-to, I say to-mah-to.”

    :) really, what I was saying was don’t scrap the whole thing to individual accounts that make it solely the responsibility of the individual to fund. The system isn’t perfect, but it starts a lot of people saving who otherwise wouldn’t think about it until they’re 20 years older.

    More as an aside, I’d say that part of the reason we can deduct $50k of income is because it’s easier to pass through Congress a little break, or “surcharge,” than to change the actual tax rates. I was just reading about Bernie’s plan to add a X% surcharge on incomes above $Y million. Fine, but why not just add a new bracket at 43%?

    Same with the ACA surcharge.

  135. Atlanta, if you are figuring on playing less than $1k out of pocket on the HSA, it seems like pretty clear winner to me. That’s a savings of over $2,600.

  136. Denver – yes that would be a typical year but you never know w/three kids. I guess I can go with the HSA and switch if it ends up costing more than I think the next year.

  137. Atlanta Mom – you also benefit from the HSA in the tax savings by putting into the HSA. If you have the extra money, you could fully fund your HSA (so more than the difference in premiums), and then over time you’ll have an emergency fund for healthcare expenses. You can use the money in there in later year, I think, even if you are no longer on a high-deductible plan.

  138. Denver – yes that would be a typical year but you never know w/three kids. I guess I can go with the HSA and switch if it ends up costing more than I think the next year.

    That’s why I suggested also looking at the worst-case scenario. My experience has been that the HSA/high deductible plans come out ahead there as well because the out of pocket max plus the premiums is lower than than for the PPO, but obviously it depends on the specifics of the plans.

  139. Does anyone run into problems with services your doctor recommends/offers (new fetal genetic tests, in my case) not being a covered service, at least by default, yet?

  140. WCE– I had that happen during one pregnancy when the then-current genetic testing that they referred everyone to wasn’t yet covered. My OB submitted extra paperwork and did some voodoo that got it covered as medically necessary. I was not involved in the process.

  141. “I think the company-run 401(k) is a hangover from the days of the pension

    I assume they are also a holdover from the pre discount brokerage era when opening a brokerage account was a big deal with a lot of hand holding vs. today when it’s all automated.”

    I’m pretty sure discount brokers were around before 401ks.

    Within the first year after starting my first job out of college, I opened a discount brokerage account for my IRA. It was not until later that my employer offered 401ks.

    OTOH, while I believe my employer was an early adopter of 401ks, it could be that enabling legislation/regulation was enacted before discount brokerage accounts began appearing.

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