Health insurance deductibles are on the rise, and planning for them is an increasing challenge. According to the 2019 Kaiser Family Foundation Employer Health Benefits Survey:
· Over the last five years, the percentage of workers covered with an overall annual deductible of $1,000 or more for individual coverage has increased 34%.
Reading: When does health insurance reset
· Workers at small businesses are much more likely to have an overall annual deductible of $1,000 or more for individual coverage than workers at large businesses (68% vs. 50%).
· In 2019, 28% of covered workers are enrolled in a plan with a deductible of $2,000 or more. in 2018 it was 26%. for covered workers in small businesses, it’s even higher, at 45%!
An unexpected bill for medical services is an unpleasant surprise for anyone, and often these charges result from a deductible schedule outlined in the terms of a health insurance plan. As deductibles become a larger part of an employee’s cost-sharing responsibility, employers and their employees need to consider when deductibles reset, how they can change at the beginning of a plan year, and when they can be transferred .
Plans that follow a calendar year deductible schedule work like this: The medical expenses you pay for covered services accumulate toward your annual deductible throughout the year, and this accumulated amount resets to $0 on January 1 every year. (Note that copays and premiums don’t count toward your deductible.) however, some plans follow a deductible schedule per plan year. A plan year begins when an insurance policy is renewed, on the first day of any month of the year. this means your deductible could reset to $0 on the first day of a month other than January. Knowing what hours your plan follows can help you avoid those unexpected bills and plan for known medical expenses.
If an employer changes to a health plan with a higher deductible at renewal or an employee chooses a plan with a higher deductible during open enrollment, the new deductible takes effect at the beginning of the calendar year. plan, which may not be January 1 with mid-year changes to plans that follow a calendar year deductible schedule, the amount accumulated for the old deductible is often rolled over into the new deductible, which must be met by end of the calendar year. this may not always be the case and can be further complicated by switching providers at renewal time. Employees who have met their old deductible can suddenly, and often unknowingly, find themselves working toward a new/additional deductible! Employers should always ask their agent about the impact changing deductibles will have on their employees, and your agent can provide expert assistance to help employees understand their new plan.
Fourth quarter rollover is a very useful feature of plans that follow a calendar year deductible schedule. this allows amounts applied to your deductible in the fourth quarter to be carried over and applied to your deductible in the next calendar year. it’s a good idea to ask if your plan includes this feature because not all plans include it. (Most HSA-eligible plans exclude this feature.) Having a fourth quarter rollover means you don’t have to delay medical treatment in the last three months of the year for fear your deductible will reset on January 1!
Group health insurance plans are highly customizable and it’s important to understand the full impact of changes made to your plan, especially when it comes to changing a plan’s annual deductible. features can differ significantly between small and large business plans. It’s always best to check with a knowledgeable agent to confirm when your deductible resets, how your deductible can change during the year, and what happens to your deductible at the end of the year. As deductibles continue to increase and become a more important part of an insured’s cost-sharing responsibilities, knowing these things can help you plan wisely for anticipated and unexpected medical expenses you’ll face throughout the year.