Deductibles hold the key to the best health plan picks

NEW YORK (Reuters) - As you pick health insurance during open enrollment at work this fall, you will probably be spared the painful premium increases that shocked American families earlier this decade.

The health insurance premium paid by employees per paycheck is typically up just 3 percent this year, according to the Kaiser Family Foundation. But, overall, health insurance costs have increased 55 percent since 2007, and employers are shifting more to their employees in other ways.

For one thing, the health insurance in your open enrollment package is likely to have an increased deductible. If you pick a plan based on the cheapest monthly premium while ignoring out-of-pocket costs, you could end up burdened by thousands of dollars in bills you cannot afford.

Last year, the average deductible for a single person was $1,505, an increase of 37 percent over the last five years, according to Kaiser. That means that besides paying premiums every payday for health insurance coverage, employees paid $1,505 for doctor visits, hospitals, x-rays, medicine and lab tests like blood tests and throat cultures before their insurance started picking up the tab. One annual check-up is free.

If you have a choice among plans, here is what you need to examine before choosing:

* Can you estimate your costs?

If you had health insurance in the past, your provider should be able to provide you with a breakdown of your previous out-of-pocket spending. If you have an online account, you can simply download a spreadsheet. Otherwise, your employer or insurer may offer calculators that help add up your healthcare costs and compare different health plans. There are also public tools (https://www.calcxml.com/calculators/ins11).

Without that detailed information, David Levitz, president of employee benefits at GCG Financial, suggests going with a traditional plan with a low deductible for a year. Then track all doctor visits, tests and medicines. Next year, add them up and perhaps make a change.

“You may find that you didn’t make the best economic decision. But if you are anxious it will give you peace of mind,” said Levitz.

* Do you have an emergency fund?

Say you choose a deductible of $2,300 - which is the average for a single person for a high-deductible plan that probably comes with the lowest monthly premiums. Maybe you are healthy and last year went to the doctor only once for a free check-up.

But what if you end up in the hospital with broken bones from a skiing or car accident? Could you come up with the cash? An MRI alone could run $3,000.

Often high deductible plans let you save pre-tax money from every paycheck in a Health Saving Account (HSA) to cover the unexpected. If not, you can save in a flexible spending account (FSA) or a regular savings account.

But people frequently choose high deductible plans because the premiums are less expensive and do not save.

To do the math, compare the total cost of the plans – the annual premium amount plus the potential out-of-pocket costs. You may find that a higher premium and lower deductible is actually in your favor.

* How costly are your drugs?

If you have a chronic condition such as diabetes or heart trouble and need costly medications and supplies, you are likely to do best with a plan with low deductibles. A National Institutes of Health study found nearly half of people with chronic conditions and deductibles greater than $1,000 struggle to pay doctor and other bills.

The burden can be substantial, but if you are worried about unlimited medical costs, be comforted by maximums imposed on plans under the Affordable Care Act. No plan can require that you pay more than $14,700 for the year for a family, or $7,350 for singles.

* Will you skimp when you should not?

The consequences of your health plan choice may end up to be life or death, if you choose a plan you cannot afford and avoid getting care when you need it. Even health policy experts like internist Ashish Jha, a professor of health policy at Harvard, deal with this.

Jha had a $6,000 deductible for his family. When faced with a racing heart, he waited to go to the emergency room because of his out-of-pocket cost. Jha recovered, but it made him think about how high deductibles are aimed at getting people to shop for lower-cost care. Yet a doctor like him could not make a good decision.

"During an emergency people can’t make good consumer decisions. There is no middle ground: You either go to the emergency room and pay thousands of dollars or you do nothing at all.  It’s very stressful,” Jha said.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Beth Pinsker and Steve Orlofsky)