Friday, April 29, 2005
The benefits of a defined out-of-pocket maximum
[Julie Appleby, "Medical costs prove a burden even for some with insurance," USA TODAY, 28 April 2005.]
The high-deductible insurance that is required to open a health savings account is viewed by some as exposing individuals to too high of financial risk. What is often overlooked, however, is that this risk is capped, whereas traditional plans can leave individuals left with significant debts they had no idea they were liable for:
Think your health insurance has you covered? Think again.
Even insured workers can find themselves on the hook for thousands of dollars, often at a time when illness has decreased their income.
Few workers realize the limits of their insurance until the bills start coming for: policies that don't cover rehabilitation care or limit it to a few visits; expensive drugs that come with a 20% charge, rather than a $20 co-pay; separate deductibles for drugs and medical care; doctors at "in-network" hospitals that aren't members of the insurer's network, leaving patients vulnerable to thousands of dollars in bills; annual "out-of-pocket maximums" that aren't always true ceilings on expenses.
Such costs can quickly add up. A drug co-payment of 20%, for example, could cost thousands a year for patients taking some cancer drugs. Avastin, a colon cancer drug, recently went on the market at a price of more than $4,000 a month. Erbitux, another colon cancer treatment, can cost $12,000 or more for a month's treatment. Gleevec, for leukemia, is more than $2,000 a month.
For those that are able to save, health savings accounts may be able to help reverse another dangerous trend:
Many Americans are not prepared. Whether struggling to meet mortgage costs, college tuition and other expenses — or simply buying all the latest gadgets — few are saving enough to weather unexpected bad times. The personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934.
[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]
[Julie Appleby, "Medical costs prove a burden even for some with insurance," USA TODAY, 28 April 2005.]
The high-deductible insurance that is required to open a health savings account is viewed by some as exposing individuals to too high of financial risk. What is often overlooked, however, is that this risk is capped, whereas traditional plans can leave individuals left with significant debts they had no idea they were liable for:
Think your health insurance has you covered? Think again.
Even insured workers can find themselves on the hook for thousands of dollars, often at a time when illness has decreased their income.
Few workers realize the limits of their insurance until the bills start coming for: policies that don't cover rehabilitation care or limit it to a few visits; expensive drugs that come with a 20% charge, rather than a $20 co-pay; separate deductibles for drugs and medical care; doctors at "in-network" hospitals that aren't members of the insurer's network, leaving patients vulnerable to thousands of dollars in bills; annual "out-of-pocket maximums" that aren't always true ceilings on expenses.
Such costs can quickly add up. A drug co-payment of 20%, for example, could cost thousands a year for patients taking some cancer drugs. Avastin, a colon cancer drug, recently went on the market at a price of more than $4,000 a month. Erbitux, another colon cancer treatment, can cost $12,000 or more for a month's treatment. Gleevec, for leukemia, is more than $2,000 a month.
For those that are able to save, health savings accounts may be able to help reverse another dangerous trend:
Many Americans are not prepared. Whether struggling to meet mortgage costs, college tuition and other expenses — or simply buying all the latest gadgets — few are saving enough to weather unexpected bad times. The personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934.
[Matthew Hisrich, "HSAs are increasing Americans' health coverage," The Topeka Capital-Journal, 26 September 2004.]
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