NEw Data Point for Health Ins Premium Increase and a Question

[fisherman]

Just received our Health Insurance premium increase. We have had the same policy for three years and it has a $5000 deductible. The previous increases have been about 12%. I have been budgeting for 15%. This increase is for 23%. I will be 46 soon if that matters. They did offer a premium that isslightly lower than last years if we take a somewhat higher deductible. This looks to be the better deal and the way I like to use Insurance anyway. The point of this is what I have said before, people should plan on at least a 15% increase in Premium each year for Health Ins.

My questions is how much do others budget for Health Ins Expense outside of the premium?

My policy pays 100% after the deductible so I have been budgeting the deductible amount each year. We have been very fortunate and have had very little expense each year so the HSA fund is growing very nicely. My thought was once we reach the point that the amount in the HSA would cover the deductible until we reach (Medicare if it exists by then) I would stop budgeting the full deductible amount and thus have additional money to save or spend. In discussing this with my doctor he stated that we were very unlikely to hit that amount every year and probably could plan for a little less and just cut back if need in bad years. I am ultra conservative in financial planning so this is a little scary to me but I do see his point and that is how Insurance companies use policy holder protection funds. The problem is we are not a large group so that plan may not work. What would you budget for medical expenses outside the deductible not considering Dental and Vision as I have separate amounts for them also allocated?

Thank you for your input and I hope this will serve as additional good info for others planning ER.

 

[dgoldenz]

I wouldn't count on a doctor's advice for budgeting your health insurance. If you ever developed a chronic condition like multiple sclerosis, cancer, rheumatoid arthritis, etc, you could easily be paying the full deductible every year. Just talked to a woman yesterday with MS whose prescription is $3,000 per month....would only take you two months to hit your deductible.

Once you get to $5k or more in your HSA account, you might want to consider raising your deductible to a higher level (like $7k) to reduce your premiums, and then you know your max out-of-pocket expense for that year would still only be $2k on top of what you have in there. You get the idea.

 

[eridanus]

My increase was 21%. Last year, it was also double digits.

Continue shoveling money into the HSA. As dgoldenz wrote, it might be needed eventually.

(What's with the plans that have only a $1000 annual prescription benefit? Might as well go bare.)

 

[dgoldenz]

My increase was 21%. Last year, it was also double digits.

Continue shoveling money into the HSA. As dgoldenz wrote, it might be needed eventually.

(What's with the plans that have only a $1000 annual prescription benefit? Might as well go bare.)

Never buy a policy with a low limit on prescriptions, especially one that doesn't carve out "specialty drugs" into a separate category that is unlimited. I mostly sell United Healthcare and Humana because Anthem caps prescription benefits to $5k per year here. Sounds like a lot - not so much if you need a Rx that costs $2500/month and isn't in the "specialty drugs" category. I always ask people "Would you buy a plan that didn't cover hospitalization?" Of course, the answer is always no. Then I ask "So why would you buy a plan with no brand name drug coverage and a limit on prescriptions?" There's usually not much of an answer for that one.

 

[Gone4Good]

I don't necessarily have a target inflation rate for health insurance. What I'm doing is looking at my premium and HSA contribution as "insurance" expense. If the premium expense grows too fast, maybe I'll cut back on the contributions to compensate if I need to.

But I look at the HSA as a self insurance fund. I plan to put the max in each and every year and never draw it down. I exclude this balance from my overall asset allocation, because it is not availalbe for other expenses. It is only available to cover severe medical conditions. Hopefully I'll be able to build a large enough balance over time that I won't be completely exposed to getting shafted by an insurance company. But that is only a hope.

 

[fisherman]

Thanks for the replies. I fully fund the HSA upto that years limit and plan to continue doing so. What I was asking is I have a yearly budget and Medical expense that are part of the deductible are one category. Right now I assume I will meet the deductible each year. This is a part of my SWR calculation. The consideration is should I lower this number to the actual average and then cover any overage out of the Emergency fund or by cutting back in other areas. I would adjust my planned budget each year based upon the last years experiences and planned for cost in the current year with an additional fudge factor built in.

Over the past three years I have budgeted based upon the full amount being needed. It has not been the case so my year end WR has actually been lower than anticipated because of this and other cost saving measure we have implemented.