Planning is at the core of good financial decisions. We plan for retirement, we plan a monthly household budget, but very few plan for healthcare expenses.
When you combine lack of financial planning with an “it’s not my money” attitude, you have the perfect recipe for the misuse and overuse of healthcare that drives up costs. Traditional health plans with lower deductibles and cushy copayments mask the reality of healthcare cost.
Consumers think a routine doctors' visit only costs $20.00, although the reality is closer to $200.00.
High deductible health plans (HDHPs), however, make it much more difficult to hide from this reality and encourage us to implement a financial plan for our healthcare.
Let’s explore this by comparing a hypothetical consumer decision-making process and experience from employee benefits enrollment to healthcare consumption.
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Education & Communication |
Looks like my benefits enrollment guide arrived in the mail today. I never understand this stuff. | I logged into the new benefit enrollment website today, and it recommended that I consider an HDHP with a Health Savings Account (HSA) because the premium is lower and I still get free preventive care. |
Open Enrollment |
Wow! The cost of the PPO sure did go up this year. Oh well, better to have too much coverage than not enough. | Interesting! The HDHP premium is much cheaper. With the money I save, I can put money aside in my HSA for my higher out of pocket health expenses. If I don’t use it this year, I can always save it for next year, or even retirement. |
Unexpected Non-Emergency |
My daughter woke up last night with a fever. Those germy kids at school must have passed along a bug. She feels awful but it’s a holiday weekend. To the ER we go, I guess. Hey, that’s what insurance is for. | My son woke up last night with a fever. I told him not to go out without a coat. He feels awful but it’s a holiday weekend. The ER is always open but that’s expensive and we haven’t met our deductible. Let’s try one of those drugstore clinics. I think it will be less than $50.00 and we can use our HSA. |
Diagnostic Testing |
My doctor thinks she saw something concerning in my blood work from the physical. She referred me to a specialist and I need more tests and scans. I have great insurance so I told her to do give me every test available so we can be sure. | My doctor referred me to a specialist for more tests and scans. We still haven’t met our deductible so I need to understand the cost. My family already budgeted some of our HSA for medical bills for the baby we are having later this year. According to my research, there are 3 other great doctors available that are cheaper than my doctor’s referral. |
Hospitalization |
We recently welcomed a son. Unfortunately, we didn’t have a good understanding of how our deductible works so while it helped with some costs, we are still receiving bills. Thankfully, it is not more than $1,000.00. | We recently welcomed our second son. Now that we have met our deductible, the plan is covering much more of the cost. So we are actually spending far less than we budgeted on medical bills for the baby. We are going to save those HSA funds for a rainy day. |
The traditional health plan participant is a passive recipient of care that lacks an understanding of how his medical decisions impact his personal financial wellbeing and has little incentive to change his behavior. For our HDHP participant, however, active healthcare consumerism guides the experience because he could see and feel the effects of his healthcare decisions in his own pockets.
To learn more about the impact of educating your employees on the cost of their healthcare, contact your OneDigital representative today.
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